Chapter Eleven

Chapter Eleven - PRINCIPLES of MICROECONOMICS by N. Gregory...

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PRINCIPLES of MICROECONOMICS by N. Gregory Mankiw (4 th Edition) Chapter Eleven Outline CHAPTER ELEVEN – PUBLIC GOODS AND COMMON RESOURCES The Different Kings of Goods - When thinking about the various goods in an economy, group according to two characteristics: o Excludability – The property of a good whereby a person can be prevented from using it o Rivalry in Consumption – The property of a good whereby one person’s use diminishes other people’s use - Divide goods into four categories: o Private Goods – Goods that are both excludable and rival in consumption Example. Ice Cream Cone o Public Goods – Goods that are neither excludable nor rival in consumption Example. Tornado Siren o Common Resources – Goods that are rival in consumption but not excludable Example. Fish in the ocean o When a good is excludable but not rival in consumption, it is an example of a good produced by a natural monopoly Example. Fire protection in a small town - For both public goods and common resources, externalities arise because something of
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This note was uploaded on 04/08/2008 for the course ECON 101 taught by Professor Idson during the Spring '08 term at BU.

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Chapter Eleven - PRINCIPLES of MICROECONOMICS by N. Gregory...

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