Textbook Notes (368,774)
Canada (162,158)
Economics (331)
ECON 1010 (72)
Chapter 5

ECON 1010 Chapter 5: Topics 30
Premium

3 Pages
26 Views
Unlock Document

Department
Economics
Course
ECON 1010
Professor
Laura K.Brown
Semester
Spring

Description
OS82 ECON101 0 PUBLIC GOODS NONRIVALRY AND NONEXCLUDABILITY Private goods are rivalrous and excludable Public goods are neither rivalrous and excludable NonRivalry: One individuals consumption of the good does not impede another individual from consuming it as well: the marginal cost of providing the public good to an additional individual is equal to zero. NonExcludability: No one can be excluded from consuming the good. Nonrivalry is related to the marginal cost of production: unlike a private good, the marginal cost of providing the public good to an additional user is zero. Pure Public Goods: Pure Public Goods represent goods that are perfectly nonrivalrous and nonexcludable. E.g. lighthouse Impure Public Goods: Impure Public Goods represent goods that are nonrivalrous and non excludable only up to a point. E.g. motorway AGGREGATING INDIVIDUAL DEMANDS: MARGINAL SOCIAL BENEFIT AND EFFICIENCY To construct the aggregate demand for a public good you have to sum the individual demands vertically Because of the nonrivalry nature of public goods, when one individual pays for a good, the other also enjoys the benefits generated. As long as the marginal social benefit is greater than the marginal cost, the action should be taken out. Efficient quantity: marginal social benefit = marginal cost. Marginal Social Benefit: The Marginal Social Benefit is the vertical sum of the individual marginal benefits. Samuelson Condition: The Samuelson Condition states that the efficient quantity of a public good is found by setting the sum of the individual marginal benefits equal to the marginal cost.
More Less

Related notes for ECON 1010

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit