Question

1.Name a product or service that has zero marginal cost (non-rival) and used by free-riders.

a).Name a product or service that has significant MC (rival) but excludes free-riders.

b).Name a product or service that has significant MC (rival) and used by free-riders.

c).Name a product or service that has zero MC (non-rival) but excludes free-riders.

2.The government is an appropriate provider of public goods- which is described above in question #

a)).The market place government is an appropriate of which good described above in question #

b).The Tragedy of the Commons describes when one of us grazes his cow in the public town common. Each mouthful of grass makes the common more barren, but only one of us is paid when the cow bears milk or goes to the slaughterhouse. This is described in question #

c).This leaves a club or artificially scarce good- described in question #

.3.Give a second example of a club or artificially scarce good.

Answer 1

1) Such goods with zero marginal cost  and used by free-riders are known as public goods ie the type of goods which are non rival and non excludable in nature. Eg: national defense. No citizen could be excluded from the protection provided by the defense services.

a) A product or service that has significant MC (rival) but excludes free-riders is called private goods which is excludable and rival in nature. Eg: cars, houses . If not paid , people could be excluded if the price is not paid.

b) A product or service that has significant MC (rival) and used by free-riders are called as common resources ie non excludable and rival. Eg: grazing land, fresh water etc.

c)  a product or service that has zero MC (non-rival) but excludes free-riders ie non rival and excludable are called club goods. Eg: cinemas, highways with toll etc.

2) These goods are public goods as described above ie national defense etc which is provided by government even to free riders.

a) The market place government is providing the good , so when market exists , it  rival and provided through markets so has a price , so could be excludable . Hence private goods but when subsidies or other such support provided by government the nature could change.

b) This is known as the free resources ie although rival in nature, could be used by anyone (common resources )

c) Artificially scarce goods are the goods which are also known as the club goods. These goods are excludable due to congestion when crowding occurs or when membership fees is to be paid but non rival.

3) Another example of club or artificially scarce good is TV cable . Tv cable or Netflix subscription requires a membership fees but once an individual has it , it is non rival.

(You can comment for doubts )