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VOCAB Chapter 11
Public Goods and Common Resources
Term | Definition |
---|---|
Excludability | The property of a good whereby a person can be prevented from using it. |
Rivalry in consumption | The property of a good whereby one person's use diminishes other people's use. |
Private goods | Goods that are both excludable and rival in consumption. |
Public goods | Goods that are neither excludable nor rival in consumption. |
Common resources | Goods that are rival in consumption but not excludable. |
Natural monopoly | Firm that produces goods that are excludable but not rival in consumption. |
Free rider | A person who receives the benefit of a good but avoids paying for it. |
Cost-benefit analysis | A study that compares the costs and benefits to society of providing a public good. |
Tragedy of the Commons | A parable that illustrates why common resources get used more than is desirable from the standpoint of society as a whole. |