Public and Private Goods (HSC SSCE Economics): Flashcards
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Two characteristics of public goods
Two characteristics of public goods
Non-excludability and non-rivalry
Non-excludability
Non-excludability
Can't prevent anyone enjoying benefits, even if they don't pay
Non-rivalry
Non-rivalry
One person's consumption doesn't reduce quantity for others
Free rider
Free rider
Benefits from a good/service without contributing to its cost
Why private markets under-provide public goods
Why private markets under-provide public goods
Can't charge consumers; free riders benefit without paying
Result of public goods market failure
Result of public goods market failure
Governments provide them using taxation to ensure contributions
Public-sector goods vs public goods
Public-sector goods vs public goods
Public-sector goods are govt-provided; not all are public goods
Why train services aren't public goods
Why train services aren't public goods
They are excludable - guards can prevent non-paying passengers
Why environmental quality is a public good
Why environmental quality is a public good
Clean air/water are non-excludable and non-rival
Why govt intervention needed for environment
Why govt intervention needed for environment
Market forces can't solve it; firms can't charge for benefits