Flashcards About Providing Public Goods

a shared good or service for which it would be impractical to make consumers pay individually and to exclude nonpayers; any number of consumers can use them without reducing the benefits to a single consumer; "something we need and makes life better, that the free market won't provide"; ex. roads, dams, lighthouses, autopsies

the part of the economy that involves the transactions of the government

someone who would not choose to pay for a certain good or service, but who would get the benefits of it anyway if it were provided as a public good

a situation in which the market does not distribute resources efficiently

an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume--can be negative or positive

the part of the economy that involves the transactions of individuals and businesses

1) impractical and inefficient to have consumers pay for good or service individually 2) impractical and inefficient to exclude those who did not pay from using the good or service

encourage creation of positive externalities (education), limit negative externalities (acid rain)

The Basic Facilities that are necessary for a society to function and grow--roads, bridges, water and sewer service

it is too expensive and impractical for consumers to pay for them

The benefit to each person is less than the cost that each would pay if the good were provided privately; the benefit to society is greater than the cost

The private sector is not willing to provide public goods in the open market since they do not generate enough profit

Some people might not be willing to pay taxes for defense, but they receive the benefits anyway