Question

D1.

What does an economist mean by the term “public good”?

What are the characteristics of a public good?

Give two examples of health-related goods or services that might be characterized as “public goods” Public goods and services are not cost-free.

How do you think people should be made to pay for them?

D2. One purpose of the government is to redistribute money from those who are well off to those who are needy. As far as health care is concerned, this might mean providing either money or health services directly to poor people. To what extent do you think the government should help poor people pay for health care? (Answer in 2 to 4 bullet points).

Answer 1

A public good refers to a product consumption of which cannot be restricted once it is provided. this attribute of a public good is known as the attribute of non-exclusion. Apart from this, a public good has an attribute which is its non-rival consumption, implying that consumption of a public good by one does not affect its consumption by another.

Unlike private goods, public goods are not consumed by economic agents individually but used collectively by society. The characteristic that enjoyment of a public good by one person does not reduce its availability to other is known as non-rivalry. Example of public goods are street light, public park, national defense, etc.

Private goods are those goods which does not possess the feature of non-rival and non-excludable. Private goods are rival in nature in the sense that consumption of good by one person reduces its availability for some other person. For example: Pen. Secondly, it is possible to exclude one person from consuming it because private good is owned by a person.

Public goods are not provided through market mechanism because it leads to free rider problem since public goods are non-rival and non-excludable in nature. Due to non-excludability, public goods is over exploited.