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Chapter 11

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ECON 200

Microeconomics Chapter 11  Excludability: the property of a good whereby a person can be prevented from using it.  Rivalry in consumption: the property of a good whereby one person’s use diminishes other people’s use.  Private goods: goods that are both excludable and rival in consumption.  Ice cream cones, clothing, congested toll roads  Public goods: goods that are neither excludable nor rival in consumption.  Tornado siren, national defense, uncongested toll road.  Common resources: goods that are rival in consumption but not excludable.  Fish, congested toll road  Club goods: goods that are excludable but not rival in consumption.  Fire protection, cable TV  Public goods  Free rider: a person who receives the benefit of a good but avoids paying for it.  Not excludable so they have a trouble selling the product (market failure)  Leads to them not supplying! So the government interferes and makes a tax on everyone to pay for it and they get it for cheaper.  When the number of beneficiaries is large and excluding one is impossible  National defense: once a country is defended you can’t exclude anyone and you enjoying the benefits doesn’t take away from others.  Basic research: creates knowledge  General knowledge is not excludable and joins the general pool  Specific technological, knowledge ca
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