ECO 1104 Lecture Notes - Marginal Utility, Marginal Cost, Free Rider Problem

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

Any situation in which unregulated markets fail to bring about a socially desirable outcome. Efficiency, whereby the output level is such that mb = mc. Left wing people tend to think that markets usually fail, while right wing people believe the opposite. The difference between public goods and private goods lies mostly on the d side as opposed to the s side. The best way to think of them is in contrast to private goods. So far we have studied private goods, which have two features (figure 11. 1) Rivalry consumption of the good in consumption: one person"s consumption infringes upon somebody else"s. D. s. and my reese"s peanut butter cup (once he stole it from e and ate it, i no longer had any use for it) Excludability in consumption: it is possible to prevent someone from consuming it. He/ she who pays for it uses it; he/ she who does not pay for it does not have a right.