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By Government: once required separate hospitals for black and white patients. **Technological improvements will increase supply, and wage will decrease **When industries unionize and only enforce training requirements, wages increase Chapter 19: Public Goods & Tragedy of Commons Non-Excludable: if people dont pay cannot be easily prevented from using the good. Nonrival: is ones person use of the good does not reduce the ability of another person to use the same good Private Good: excludable and rival Public Good: non excludable and nonrival, A good is NOT A PUBLIC GOOD just because the government provides it, like education Free Rider: enjoys the benefits of a public good without paying a share of the costs, leads to an underproduction of a good, Governments can increase welfare by providing the good (and paying for it through taxation), Since the government has the ability to tax its citizens, it essentially circumvents the free rider problem. Forced Rider: someone who pays a share of the costs of a public good but who does not enjoy the benefits Club Goods: goods that are excludable but nonrival, ex, a tv show like Game of Thrones Common Resources: are goods that are nonexcludable but rivalTragedy of the Commons: is the tendency of any resource that is unowned and hence non excludable to be overused and under maintained. Solutions: command and control, and tradable allowances, and the ITQ system **Charge a price based on the optimal Q where that intersects their demand curve Lindahl Demand Curve: It would represent the vertical summation of the demand curves of each individual consumer in that market. Chapter 20: Political Economy & Public Choice Governments should focus on producing public goods and let markets produce private goods. NormativeGovernments generally focus on producing public goods and let markets produce private goods. Positive Positive economics is describing, explaining, or predicting economic events. Normative economics is recommendations or arguments about what public policy should be. **Diffuse costs and concentrate benefits, resources can be wasted on projects with low benefits and high costs -Costs of a policy are spread very widely. -Benefits are highly concentrated in a small interest group. -Example: Sugar quotas (American consumers of candy, soda, and other sweets end up paying over $1,000,000,000 more for these goods than they would without the quota.) Ways that governments can fix market failures (“fix” = reduce DWL, increase gains from trade) -Pigovian taxes -Subsides -Regulation -Production of public goods -Reduction of resource overuse with common property resources Public Choice Theory: some politicians ability to build support for policies that generate more costs than benefits are because of rational ignorance of most voters is higher in the situation of concentrated benefits and diffused costs.