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Chapter 11: Public Goods and Common Resources

Principles of Economics, 4th Edition (Student Edition)

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March 6, 2008 11. PUBLIC GOODS AND COMMON RESOURCES common resources goods that are rival in consumption but not excludable cost–benefit analysis a study that compares the costs and benefits to society of providing a public good excludability the property of a good whereby a person can be prevented from using it free rider a person who receives the benefit of a good but avoids paying for it private goods goods that are both excludable and rival in consumption public goods goods that are neither excludable nor rival in consumption rivalry in consumption the property of a good whereby one person’s use diminishes other people’s use Tragedy of the Commons a parable that illustrates why common resources get used more than is desirable from the
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Unformatted text preview: standpoint of society as a whole a. The Different Kinds of Goods Define public goods and common resources and give an example of each. b. Public Goods a. The Free-Rider Problem b. Some Important Public Goods i. National Defense ii. Basic Research iii. Fighting Poverty c. The Difficult Job of Cost-Benefit Analysis What is the free-rider problem? Why does the free-rider problem induce the government to provide public goods? How should the government decide whether to provide a public good? c. Common Resources a. The Tragedy of the Commons b. Some Important Common Resources March 6, 2008 i. Clean Air and Water ii. Congested Roads iii. Fish, Whales, and Other Wildlife Why do governments try to limit the use of common resources?...
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