Classify each of the following items as a public good, a private good, a natural monopoly...

Classify each of the following items as a public good, a private good, a natural monopoly good, or a common resource, and explain your classification.

A car licenses

Tuna in the Pacific Ocean

Airline service within Canada

A cinema

A local storm-water system

Solutions

Expert Solution

1) A Car License is a private good because it is own by one person and no one have any right on it.

2) Tuna in Pacific Ocean is a public good because it has characteristic of being non excludable and non rivalrous. There is many Tuna so consumption of someone does not affect the consumption of other and no one could be excluded from consumption.

3) Airline within Canada is a natural monopoly. Because here heavy investment is needed and natural monopoly occurs where heavy investment needed because only few can made heavy investment in one go.

4) A cinema is a common resource. Common resources are those in which consumption of one does not affect the consumption of others but some one could be denied consumption. In cinema without tickets entry is prohibited.

5) A local water system is a public good because no one could be denied to use it and consumption by one does not affect others.

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Rahul Sunny answered 1 year ago

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