Externality Definitions

Question 1

Private goods

Answer 1

Rivalrous and excludable meaning producers can charge a price on them

Question 2

Public good

Answer 2

Non-excludable and non-rivalrous meaning producers cannot charge prices on them (e.g healthcare in some countries, police, fishing pond)

Question 3

Tragedy of the commons/ Free rider problem

Answer 3

There is resource depletion because a price cannot be charged on the public good = used until nothings left

free rider = people use and deplete yet they dont pay = jump on bandwagon for free

Question 4

capital good

Answer 4

previously produced good that is not directly consumed, but is used by businesses to produce other goods or services.

Question 5

common pool resource

Answer 5

rivalrous & non ecludable => fight for depletion but everyone can use it

Question 6

Why is it bad that gov. rgeulate CPR?

Answer 6

• might have less knowledge
• political decisions affect beauraucracy
• inflexible changes
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Question 7

sustainability

Answer 7

preserving resources (or the environment) so that they can still be used in the future.

Question 8

9 Key concepts;

Answer 8

scarcity, choice, interdependce, change, economic wellbeing, intervention, efficiency, equity, sustainability, intervention, change

Question 9

entrepreneurship

Answer 9

Using FOP, innovation to start up a biz to generate profit

Question 10

scarcity

Answer 10

When the available resources or factors of production are finite, while human wants and needs are infinite.

Question 11

opportunity cost

Answer 11

the cost expressed in the next best alternative sacrificed