Chapter 18 Summary

Chapter 18 Summary - Chapter 18 Summary: Public Goods and...

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Chapter 18 Summary : Public Goods and the Role of Government A public good is something that benefits many people, whether or not they have paid for it. Also, the benefits to any one individual of the good do not depend on how many others also benefit. Public goods just cannot be efficiently supplied by the private market. Government has a vital role to fill. Private goods … they are excludable : suppliers of the good can prevent people who do not pay from consuming the good. Suppliers do not sell them unless they are paid for. If you can prevent someone from enjoying the good’s benefits, it is excludable. They are also rivals in consumption : the same unit of the good cannot be consumed by more than one person at the same time. It’s like you eating an apple. No one else can eat that apple at the same time. Its’ quantity is decreased by your consumption. Public goods … are non-excludable : you cannot prevent consumption of the good by people who do not pay for it. (examples: justice system, disease prevention, national defense, scientific research, fire protection). They are also non-rival in consumption: that is to say, more than one person can consume them at the same time. TV programs. Others can watch while you do. The services of the city police. A concert on network TV. The arrival of one more person in a neighborhood does not lower the level of police protection enjoyed in the community. And when one additional person switches on the TV, no other viewer is affected. There are essentially four types of goods. The type of good depends upon (1) whether or not it is
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Chapter 18 Summary - Chapter 18 Summary: Public Goods and...

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