Question

A) Give an example of a public good that you personally value. Explain how it is non-rival and comment on the degree to which it is non-rival. Explain how it is non-excludable and comment on the degree to which it is non-excludable. Please be specific.

B) The minimum wage. Why does government do this activity? Do you agree or disagree with this government intervention, and why?

Answer 1

Part A) Knowledge is a valuable public good.

Non-rivalrous

For a good to be non-rivalrous, it must not be diminished by consumption. Knowledge of a person about anything does not negatively affect the knowledge of another. It doesn’t block the other’s knowledge.

The nature in which this knowledge is shared can make it rivalrous sometimes. For example knowledge on paper can be rivalrous but over the internet, digitally becomes non-rivalrous.

The degree of being non-rivalrous tough is high in terms of knowledge.

Non-excludable

Knowledge further is non-excludable in nature as well. Knowledge is available for all. In the long run, it is non excludable. But, for a short run, the degree of non-exclusivity of certain type of knowledge may be affected by certain Patents. Similarly, the Intellectual Property Rights(IPR) help in sharing knowledge by safeguarding the interest of people like authors and thus reducing the amount of information kept as secret.

The degree of non-excludability is moderate in short run and high in long run.

Part B) MINIMUM WAGE

The minimum wage is the lowest amount of renumeration which an employer can pay his workers legally. Below this, the workers have a right to be protected and may refuse to sell their labour services.

The government intervention in setting minimum wage is to help the labour combat with poverty as well as ensuring that labour doesn’t get exploited. It brings stability in workforce by providing an incentive in terms of motivation of a minimum pay in the minds of the labour.

Although having its benefits, if set too high, it might induce unemployment as the owners of businesses would not be willing to pay this amount.

But, minimum wages seem to be an effective measure. Especially to ensure that workers are being provided so as to maintain a basic living. The government also uses it in times of distress to help the labour. Further saving the labour from being exploited by the job providers. It seems to be a required initiative