What are the main characteristics of a public good? Why does the government produce public goods rather than allowing firms in the competitive market to do so?
Public goods share two characteristics: (1) they are nonexclusive in that once they are produced, everyone can
consume them; and (2) they are nonrival in that the consumption of the good by one person does not preclude
consumption by another. Governments typically produce these types of goods because if left to the private sector,
none would be produced due to the nonexclusive, nonrival characteristics of public goods.
You might also like to view...
Monopolistically competitive firms use product differentiation to increase the price elasticity of demand
a. True b. False
When people’s income increases, demand for science fiction novels increases. The novels are
a. an inferior good. b. substitutes. c. a normal good. d. regular goods.
If Norway sold more goods and services abroad than it purchased from abroad, then it had
a. positive net exports which is a trade surplus. b. positive net exports which is a trade deficit. c. negative net exports which is a trade surplus. d. negative net exports which is a trade deficit.
Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of buying his books at the university bookstore instead of online is:
A. $175 B. $5 C. $170 D. $9