Public Goods

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A Public Good is a shared good or service for which it would be inefficient or impractical to1. make consumers pay individually2. exclude those who did not pay

Cost and Benefits

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governments step in to act in the public interest when they determine that the benefits of a policy outweigh the drawbacks, or the cost.

Criteria 1

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The benefit to each individual is less than the cost that each would have to pay if it were provided privately.

Criteria 2

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The total benefits to society are greater than the total cost.

Infastructure

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The basic facilities that are necessary for a society to function and grow.

Subtopic

Free-Rider Problem

Free rider

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Someone who would not be willing to pay for a certain good or service, but would get the benefit of it anyway if it were provided as a public good.

Characteristics of Public Goods

Public Sector

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The part of the economy that involves the transactions of the government. (How the money is handeled)

Private Sector

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The part of the economy that involves transactions of indiciduals and businesses, would have little incentive to produce public goods.

First Feature

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First feature of public goods is making each consumer pay.

Second Feature

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The second feature of public goods is excluding non-payers.