Economics Flashcards: Nonexcludable & Rival

Questions and Answers

What does nonexcludable mean?

Preventing someone from benefiting is easy

Impossible or costly to prevent someone from benefiting (correct)

A good that can be consumed by only one person

A good that is limited in quantity

What is a rival good?

A good whose use by one person decreases the quantity available to someone else.

What is a nonrival good?

A good whose use by one person does not decrease the quantity available to someone else.

What defines a private good?

A good or service that can be consumed by only one person at a time. Signup and view all the answers

What is a public good?

A good or service that can be consumed simultaneously by everyone and from which no one can be excluded. Signup and view all the answers

What is a common resource?

A resource that can be used only once, but no one can be prevented from using what is available. Signup and view all the answers

What is a natural monopoly?

A firm that can produce at a lower cost than two or more firms can. Signup and view all the answers

Who is a free rider?

A person who enjoys the benefits of a good or service without paying for it. Signup and view all the answers

What does the principle of minimum differentiation state?

The tendency for competitors to make themselves identical to appeal to the maximum number of clients or voters. Signup and view all the answers

What is rational ignorance?

The decision not to inquire information because the marginal cost of doing so exceeds the marginal benefits. Signup and view all the answers

What is the tragedy of the commons?

The absence of incentives to prevent the overuse and depletion of a commonly owned resource. Signup and view all the answers

What is an individual transferable quota?

A production limit that is assigned to an individual, who is free to transfer the quota to someone else. Signup and view all the answers

Study Notes

Economic Concepts of Goods and Resources

Nonexcludable: Resources that are accessible to everyone without the ability to prevent use, e.g., public parks, police protection.
Rival: Goods whose consumption by one person limits availability to others, such as concert tickets and security systems.
Nonrival: Resources that can be consumed by multiple users without reducing availability, e.g., public safety and natural fish stocks in the ocean.

Types of Goods

Private Good: Exclusively consumed by one individual who has purchased or owns it, e.g., soft drinks or clothing.
Public Good: Accessible for simultaneous consumption by all, with no one being excluded from usage; characterized by shared benefits.
Common Resource: A limited resource available for use, which can be depleted, yet cannot prevent others from using it, e.g., fisheries or forests.

Market Structures and Behaviors

Natural Monopoly: Occurs when a single entity can produce goods at a lower cost than multiple companies, leading to efficiency in production.
Free Rider: An individual who benefits from a good or service without contributing to the cost, often affecting the provision of public goods.

Decision-Making and Economic Behavior

Principle of Minimum Differentiation: Competitors tend to offer similar products or positions to attract the largest customer base or electorate.
Rational Ignorance: Choosing not to seek information when the cost of obtaining it exceeds the expected benefits.

Societal Issues

Tragedy of the Commons: The problem resulting from collective overuse and depletion of a shared resource, due to lack of individual incentives for conservation.
Individual Transferable Quota: Permissions assigned to individuals to limit production, transferable to others, encouraging efficient resource allocation.

Description

Test your understanding of key economic concepts with these flashcards focused on nonexcludable goods and rival resources. Learn definitions, examples, and implications for resource management. Perfect for students of economics or anyone interested in these important principles.