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LU 8-9 PUBLIC GOODS What are the characteristics of public goods? How do pure public goods...

LU 8-9 PUBLIC GOODS

  1. What are the characteristics of public goods?
  2. How do pure public goods differ than pure private goods?
  3. Why is the marginal cost of allowing another consumer to enjoy the benefits of a pure public good always zero even though the marginal cost of producing the good is positive?
  4. How do congestible public goods differ than the pure public goods?
  5. How does the demand for a pure public good differ than that of a pure private good? The can the demand for a pure public good be derived?
  6. Under what condition is the output level of a pure public good efficient?
  7. What are the characteristics of the Lindahl equilibrium for cooperative supply of a pure public good?
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Answer #1


The following are the characteristics of public goods:

* Non rivalarly:- The public goods are available to all the consumers in an unlimited quantity. The other consumers does not reduce the consumption of the public goods of other consumer. Example:- Air

* Non excludable:- The public goods no one can be excluded from its usage. It is available freely to the people.

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