Economics 1021A/B Lecture Notes - Lecture 17: Coldplay, Private Good, Public Good

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4 Nov 2016

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ECON 1021A/B Full Course Notes

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Goods, services and resources differ in the extent to which people can be excluded from (cid:272)o(cid:374)su(cid:373)i(cid:374)g the(cid:373) a(cid:374)d i(cid:374) the e(cid:454)te(cid:374)t to (cid:449)hi(cid:272)h o(cid:374)e pe(cid:396)so(cid:374)"s (cid:272)o(cid:374)su(cid:373)ptio(cid:374) rival other people"s consumption. Goods, services, and resources can be classified according to whether they are excludable or nonexcludable and rival or nonrival. A good is excludable if only the people who pay for it are able to enjoy its benefits. B(cid:396)i(cid:374)k"s se(cid:272)u(cid:396)it(cid:455) se(cid:396)(cid:448)i(cid:272)es, a(cid:395)ua(cid:272)ultu(cid:396)e"s fa(cid:396)(cid:373) fish, a(cid:374)d a coldpla(cid:455) (cid:272)o(cid:374)(cid:272)e(cid:396)t a(cid:396)e e(cid:454)a(cid:373)ples. A good is nonexcludable if it is impossible (or extremely costly) to prevent anyone from benefiting from it. The services of the police, fish in the pacific ocean, and a concert on network television are examples. A good is rival if o(cid:374)e pe(cid:396)so(cid:374)"s use of it de(cid:272)(cid:396)eases the (cid:395)ua(cid:374)tit(cid:455) a(cid:448)aila(cid:271)le fo(cid:396) so(cid:373)eo(cid:374)e else. A b(cid:396)i(cid:374)k"s t(cid:396)u(cid:272)k (cid:272)a(cid:374)"t deli(cid:448)e(cid:396) (cid:272)ash to t(cid:449)o (cid:271)a(cid:374)ks at the sa(cid:373)e ti(cid:373)e. a fish (cid:272)a(cid:374) (cid:271)e (cid:272)o(cid:374)su(cid:373)ed o(cid:374)l(cid:455) once.

Related Questions

1. Without government intervention, public goods tend to be

a. underproduced and common resources tend to be under-consumed.

b. overproduced and common resources tend to be overconsumed

c. overproduced and common resources tend to be under-consumed.

d. underproduced and common resources tend to be overconsumed.

2. Which of the following pairs of goods includes a good that is excludable and rival in consumption as well as a good that is not excludable and not rival in consumption?

a. congested non-toll road, national defense

b. tablet computer, a gym membership at a gym that always has plenty of open equipment and classes

c. online music subscription, streetlight

d. tablet computer, national defense

3. Which of the following is a lesson from the Condorcet paradox?

a. Majority voting always indicates what outcome a society really wants.

b. Under certain conditions, there is no scheme for aggregating individual preferences.

c. When there are more than two options, deciding the order in which to vote can have a powerful influence over the outcome of an election.

d. If voters are choosing a point along a line, then the majority rule will pick the most preferred point of the median voter.

crimsonalligator541

Butchart Gardens is a very large garden in Victoria, British Columbia, renowned for its beautiful plants. It is so large that it could hold many times more visitors than currently visit it. The garden charges an admission fee of approximately $30. At this price, 1,000 people visit the garden each day.

Are visits to Butchart Gardens excludable or nonexcludable? Are they rival in consumption or nonrival? What type of good is it?

What do you think would happen to the number of visitors if the admission fee were reduced to $15? In your opinion, what is the socially optimal admission fee? Justify your answer.

Defend your views by citing information from the book, the Web and/or your own experiences. First, post your response on the discussion board, and then read and reply to the posts of at least two other students, citing those views with which you agree or disagree as well as your reasons for agreeing or disagreeing

List the public-good aspects (if any) of the following goods:

a. Safety.

1.It involves choices the public makes, such as safe driving, that enhances their own safety.

2.When one person acts in a safe manner, it affects others not included in the decision to act safely. It reduces risks to others.

3.Safety has no public-good aspects, since it is both rival and excludable.

4. If safety provides a safe environment, it is provided for all people, and one person enjoying safety does not preclude others from benefiting from that safety.

b. Street names.

1.Naming streets allows people to orient themselves in towns and facilitates communication. Since the government is in charge of naming streets, they are a public good.

2.Naming streets is not a public good because it is up to each person to navigate maps and streets. Naming streets allows people to orient themselves in towns and facilitates communication. Although everyone benefits from street names, no one wants to pay the costs if some people are free riders. The government eliminates the free rider problem by using tax dollars to name streets, thus creating a public good.

3.Naming streets has no public-good aspects, since street names are rival (unique to towns) and excludable (once used in a town, it cannot be used again).

4. Naming streets allows people to orient themselves in towns and facilitates communication. Once a street is named, it benefits all people. No one can be excluded from referring to that name. In addition, one person using that street name does not preclude others from referring to that street.

C. A steak dinner.

1.A steak dinner is a public good because an entire cow has to be butchered to produce the steak. Other people receive the remaining meat, making the steak a public good.

2.A steak dinner is a public good because cows graze on public land. In this way, farmers are often free riders and the meat they produce is actually a public good.

3.A steak dinner has no public-good aspects, since it is both rival (if one person eats it, no one else can) and excludable (if you don't pay for it, you don't get it).

4. A steak dinner is a public good because the government subsidizes meat farms. In other words, the price of a steak is partly paid for by taxes, making the steak itself a public good.

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Economics 1021A/B Lecture Notes - Lecture 17: Coldplay, Private Good, Public Good

ECON 1021A/B Full Course Notes

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