Study unit 6 - public goods and common resources - Ch 11.ppt - In this chapter look for the answers to these questions What are public goods What are

Study unit 6 - public goods and common resources - Ch...

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1 CHAPTER 11 PUBLIC GOODS AND COMMON RESOURCES In this chapter, look for the answers to these questions:What are public goods? What are common resources? Give examples of each. Why do markets generally fail to provide the efficient amounts of these goods?How might the government improve market outcomes in the case of public goods or common resources?
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2 CHAPTER 11 PUBLIC GOODS AND COMMON RESOURCES Introduction We consume many goods without paying: parks, national defense, clean air & water. When goods are free, the market forces that normally allocate resources are absent. The private market may fail to provide the socially efficient quantity of such goods. One of the Ten Principles from Chapter 1: Governments can sometimes improve market outcomes.
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3 CHAPTER 11 PUBLIC GOODS AND COMMON RESOURCES
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4 CHAPTER 11 PUBLIC GOODS AND COMMON RESOURCES The Different Kinds of Goods Private goods : excludable, rival in consumption example: food Public goods : not excludable, not rival example: national defense Common resources : rival but not excludable example: fish in the ocean Natural monopolies : excludable but not rival example: cable TV
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A A C C T T I I V V E L E L E E A A R R N N I I N N G G 1 1 : : Categorizing roads Categorizing roads A road is which of the four kinds of goods? Hint : The answer depends on whether the road is congested or not, and whether it’s a toll road or not. Consider the different cases.
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