explain why some goods should be provided by the government and others should be
ID: 1232278 • Letter: E
Question
explain why some goods should be provided by the government and others should be provided by businesses. Given a list, correctly identify types of goods based on excludability and rivalness. Support your answer.Task 1: Consider the following list of goods. For each good, explain the following points. Is the good rival? Is the good excludable? Identify the type of good (Private Good, Public Good, Common Resource, or Quasi Public Good) Are there any externalities associated with this good? Explain whether the private market should provide this good or the government should provide this good. Explain in terms of whether the characteristics of the good would make it difficult to be provided by the private market or the government.
List of Goods:
A. A cup of coffee at a coffee shop
B. City fire protection
C. Polar bears in the Arctic
D. Clean air
Thank you
Explanation / Answer
There are some goods in the economy that are required by the public but are not profitable for the businesses. Businesses do not like to invest where profit is not there. Such goods are provided by the government to the people and are known as public goods. Public Goods are freely available to the public and generally have two major characteristics: a.) The good is non rival in consumption i.e. your consumption does no affect my consumption neither it decreases my consumption nor it increases my consumption b.) The good is non excludable i.e you cannot refrain a person from using that good despite of whether he is paying or not paying for the good. Cup of coffee at coffee shop is there property and you will have to pay for buying it. Hence, it is rival as well as excludable. It is a private good. City fire protection is provided by the government and it is non rival and non excludable. Provided free of cost hence, it is a public good. Polar Bears are a common resource a natural resource or wildlife you can say. Clean Air is non rival and non excludable but not provided by government. Though government can take steps to ensure that air is not polluted by industries and firms. You can say it to be as a Quasi Public Good
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