ECON 200 Lecture Notes - Tax Rate, Free Rider Problem, Supplemental Security Income
17 Mar 2014
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It diminishes others" use: tacos- when buy and consume, no one else can consume them, national defense not rival in consumption: i. There is an incentive for shippers to try to be able to use lighthouse w/o paying. Markets are usually a good way to organize economic activity, and in some cases they are inefficient ex. Lighthouses mark specific locations so that passing ships avoid wrecks. When inefficient, government intervention may achieve efficiency and improve outcomes. Important characteristics of goods: a good is a rival in consumption if one person"s use of all benefits go to shippers (not rival in consumption- seeing lighthouse doesn"t interfere w/ anyone else seeing/benefitting from it) Not excludable- b/c no one is prevented from. Public goods the number of beneficiaries is large exclusion of any one of them is impossible. Private goods- excludable + rival in consumption (ex. Pure public goods- not rival and not excludable (public goods provided by gov.
