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Questions and Answers
Public goods are mainly private utilities such as roads and bridges.
Public goods are mainly private utilities such as roads and bridges.
False (B)
Public goods fall under the category of social capital.
Public goods fall under the category of social capital.
True (A)
Street lighting is an example of a private good.
Street lighting is an example of a private good.
False (B)
Public goods are only accessible to those who pay for them directly.
Public goods are only accessible to those who pay for them directly.
Everyone in society benefits from public goods, even if they don't pay for them directly.
Everyone in society benefits from public goods, even if they don't pay for them directly.
Private firms are generally interested in producing merit goods.
Private firms are generally interested in producing merit goods.
Merit goods are exclusively provided by the government and never by the private sector.
Merit goods are exclusively provided by the government and never by the private sector.
Public goods are always provided by the government and never by the private sector.
Public goods are always provided by the government and never by the private sector.
Private goods are only produced by private firms and not by the government.
Private goods are only produced by private firms and not by the government.
Merit goods are goods that are always profitable for private firms to produce.
Merit goods are goods that are always profitable for private firms to produce.
Private goods are typically produced by the public sector for the purpose of profit.
Private goods are typically produced by the public sector for the purpose of profit.
Merit goods are considered part of public goods.
Merit goods are considered part of public goods.
Public goods can be rivalrous and excludable.
Public goods can be rivalrous and excludable.
Joint demand refers to the situation where the demand for one good is linked to another good.
Joint demand refers to the situation where the demand for one good is linked to another good.
Private goods are always excludable and rivalrous.
Private goods are always excludable and rivalrous.
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Study Notes
Public Goods
- Provided by the government
- Examples include public utilities such as roads, streets, bridges, electricity, safe water, and sanitation
- Referred to as "infrastructure" or the social capital of the society
- Everyone benefits from them, even if they don't pay for them directly
- Examples of indirect benefits include street lighting, police and defense
- No private firm or sector would wish to produce them
Merit Goods
- Essential social services offered by the government
- Can also be offered by the private sector
- Examples include education and health care
- Characterized by "joint demand" private goods
Private Goods
- Produced by the private sector for profit
- Not provided by the government
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