Chapter 11 Notes

Chapter 11 Notes - ECON 101 BALABAN Prices allow the...

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ECON 101 – BALABAN Prices allow the efficient allocation of resources. When something is provided for free, private markets will not necessarily produce enough, and consumers may consume too much. The government steps in and will provide or regulate these goods. Goods can be categorized. Two useful questions to ask of every good are whether or not the good is excludable, and whether or not it is rival in consumption. Asking these questions separates goods into four categories Rival in Consumption Not Rival in Consumption Excludable Private Good -Ice-cream cones -Clothing -Congested Toll Roads Natural Monopoly -Fire protection -Cable TV -Uncongested Toll Roads Not Excludable Common Resources -Fish in the Oceans -The Environment -Congested nontoll roads. Public Good -Tornado Sirens -National Defense -Uncongested, nontoll roads. Private Goods – are both excludable and rival in consumption. Most goods in an economy are private goods. Public Goods
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Chapter 11 Notes - ECON 101 BALABAN Prices allow the...

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