Step+11.+Public+Goods+and+Common+Resources-+Sarah

=Public Goods and Common Resources = 



__**Brief Introduction**__ Now that we've learned about the externalities, let's learn about different types of goods and its problems!

__**Key Terms**__ excludability: whether or not a person can be prevented from using a good rivalry in consumption: whether or not one person's use diminished other people's use private good: goods that are both excludable and rival in consumption public good: good that are neither excludable nor rival in consumption common resources: goods that are rival in consumption but not excludable natural monopoly: goods that are excludable but not rival in consumption

__**What We Will Learn**__ You'll learn how to distinguish the goods into the 4 types.

__**Introduction**__ You could groups goods into 4 groups: private, public, common, and natural monopoly. You always ask this question: 1. is the good excludable? 2. is the good rival in consumption? With these two very simple questions, you could group any kinds of goods!

 __**Topics**__ media type="youtube" key="TPvu7D_64rs" height="340" width="560" (image made by Lauren Lee) This sums up everything easily!

1. Public Goods -some of the important public goods include: national defense, basic research, and fighting poverty -public goods are sometimes a problem to the government due to the __free rider problem__ -this prevents private markets from supplying public goods -in order to solve this, the government decide to provide the public good IF the benefit exceeds the cost OR the the government can pay for it through tax
 * free rider problem: occurs when people who receive the benefit of the good doesn't pay for it.

2. Common Resources -some important common resources include: clean air and water, congested roads, wildlife such as whales - common resources are sometimes a problem to the government due to the __tragedy of the commons__ -solution could be property rights because it causes profit motives!
 * tragedy of the commons: common resources tended to be "over-used" (similar to negative externality)

__**  Conclusion **__ Now you know that goods can be grouped into 4 groups in whether they are excludable and rival in consumption.

__Quiz 1. Try to come up with one example for each category of goods 2. What category would trees fit into? 3. How do we solve tragedy of the commons? a. tax b. property rights c. regulations d. no solution **

A: 2- common 3- B **__

