Question

7a. Show a market for a pure public good. Put a real world "title" on the market for a pure public good provided in the United States. 7b. Show an "external" market to the public good market and the positive externality effect in the market from the public good. Put a real world "title" on the market for a pure public good provided in the United States.

Answer 1

Answer 7a) A pure public good is equally available in the market for all public of the relevant community. The characteristic for pure public good is non-excludability, non- rival in consumption and non-rejectable in nature. Thus, above three nature is available in the market is called pure public good. In the United State the nuclear defence system or national defence service provided a pure public good. 7b) An externality is a benefit or cost accruing to a third party external to the market matter. The result of externality to the public good maret is inefficiently allocation of resource Producer and consumer neglect the external effects of their action when deciding how much demand or supply is market equilibrium. These externalities lead to the market inefficiency or market failure. The positive externality like demand side market failure, education and new technology effect in the market from the public good.