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Public Goods

Module. Micro: Econ:. 40. 76. Public Goods. KRUGMAN'S MICROECONOMICS for AP*. Margaret Ray and David Anderson. What you will learn in this Module :. How public goods are characterized and why markets fail to supply efficient quantities of public goods.

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Public Goods

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  1. Module Micro: Econ: 40 76 Public Goods • KRUGMAN'S • MICROECONOMICS for AP* Margaret Ray and David Anderson

  2. What you will learnin thisModule: • How public goods are characterized and why markets fail to supply efficient quantities of public goods. • What common resources are and why they are overused. • What artificially scarce goods are and why they are under-consumed. • How government intervention in the production and consumption of these types of goods can make society better off. • Why finding the right level of government intervention is often difficult.

  3. Private Goods • Private goods are what we have studied thus far • Private goods have two characteristics. They are; • Excludable • Rival

  4. Public Goods • Public goods are; • Non-excludable • Non-rival

  5. Common Resources • Common resources are; • Non-excludable • Rival

  6. Artificially Scarce Goods • Artificially scarce goods are; • Excludable • Non-rival

  7. Markets Only Provide Private Goods Efficiently • Markets will not provide the efficient level of public goods • The efficient level of public goods is the quantity where MSC = MSB

  8. Providing Common Resources • Examples of common resources • The problem of overuse and the “Tragedy of the Commons” • Maintaining a common resource iphoto

  9. The Efficient Level of Artificially Scarce Goods • Example of artificially scarce good • MC of providing the good is zero • Firms can’t set price equal to zero

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