Chapter+11

Public Goods and Common Resources =Key Concepts=
 * Excludability
 * Rivalry in consumption
 * Private goods
 * Public goods
 * Common resources
 * Free rider
 * Cost-benefit analysis
 * Tragedy of the Commons

=Main Idea= In this chapter, you will learn about different types of goods and how these goods affect the market.

=Different Types of Goods= The first step in classifying a good is to question whether a good is **excludable (can an individual be prevented from using a good)** or **rival in consumption (individual's use of the good decreases the use of others)**? There are four main types of goods: private, public, common resources, and natural monopoly.




 * Private goods:** Both excludable and rival in consumption. Individuals can prevent one from another using the good.
 * Public goods:** Neither excludable nor rival in consumption. No one can prevent one another from using the good.
 * Common goods:** Individuals cannot prevent others from using the good, but there are limited amount of goods in the market.
 * Natural monopoly:** Some individuals can be prevented from using it, but one cannot reduce another person's ability to use it.

=Free Rider= In a free rider problem, individuals who do not pay can actually receive benefit.

=Tragedy of the Commons=

=== Common resources are not excludable, but rival in consumption. Therefore, an individual's overuse of the good can actually hurt others from using the good. This eventually causes negative externality. Individuals in society are driven by incentives to take advantage of the goods. Therefore, in many cases, the government puts taxes or limitations on how much each individual can use the common resources. ===

media type="youtube" key="0U4sQwpyYU0" height="344" width="425" =Questions=
 * 1) What are the four main types of goods?
 * 2) What does government do to prevent individuals from overusing common goods?
 * 3) What is free rider problem?
 * 4) Which good is excludable, but not rival in consumption?

=Conclusion= === There are different types of goods within a market. It is important to understand each of them so that it is easy to classify which good falls into which category. Remember the four main types of goods: public, private, common resources, natural monopoly. ===