Question

Economists do not define “pubic goods” as any good provided by a government.  However, it is frequently the case that what economists do identify as public goods actually are provided by a government.

a.   Explain the two characteristics that economists use to define a public good.  For each, give an example of a good that displays that characteristic but not the other characteristic.  Do not use examples from the text, the lecture, or the problem set.    

b.  Why are public goods, as defined by economists, frequently provided by a government rather than a private market?  Use a graph to illustrate your answer.

Answer 1

A. The two characteristics which an economist use for a public good is non rival and non excludable

Public good is a good which is non rival and non excludable

A good with non excludable but rival are known as common resources e.g. govt buses

An excludable good but non rival are club goods example cinemas, private parks

b. Because private market leads to under production of those goods because private market will set private benefit equals to cost of that public good