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Questions and Answers
What characteristic of public goods allows free-riders to benefit without payment?
What characteristic of public goods allows free-riders to benefit without payment?
- Rejectability
- Excludability
- Rivalry
- Non-excludability (correct)
Which of the following is NOT an example of a public good?
Which of the following is NOT an example of a public good?
- Streetlight
- Lighthouse
- Flood control
- Private security service (correct)
Which of the following best describes the feature of non-rivalry in public goods?
Which of the following best describes the feature of non-rivalry in public goods?
- One person's consumption does not reduce availability for others. (correct)
- Goods are provided at a cost to users.
- One person's consumption diminishes another's consumption.
- Everybody pays for the benefits equally.
What is an example of a community good?
What is an example of a community good?
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Which of the following indicates continuous consumption of public goods?
Which of the following indicates continuous consumption of public goods?
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What differentiates collective goods from community goods?
What differentiates collective goods from community goods?
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Study Notes
Market Limitations
- Markets struggle to exist without specific conditions; absence of conditions inhibits market formation.
- Public goods are not provided by market mechanisms due to inability to withhold goods for non-payment.
Characteristics of Public Goods
- Non-rivalry: One person's consumption does not diminish the availability for others, exemplified by streetlights.
- Non-excludability: Goods cannot restrict access to only those who pay, allowing for free-riders, as seen in radio and television broadcasts.
- Social vs Private Benefits: Social benefits, like healthcare and education, outweigh individual private benefits.
- Non-rejectability: Individuals cannot refuse consumption, as with street lighting.
- Continuous Consumption: Public goods such as traffic lights are always in use.
Types of Goods
- Collective Goods: Include parks, beaches, streets, roads, public transport, and sanitation systems; may sometimes require user fees for users.
- Community Goods: Examples are defense services, police, prisons, and streetlights; display both non-rivalry and non-excludability.
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