Question

In: Economics

Consider the following items: a fish fillet served at a restaurant fish in the ocean exotic...

Consider the following items:

  • a fish fillet served at a restaurant
  • fish in the ocean
  • exotic fish in a huge aquarium in a privately-owned building
  • an almost empty free-access garbage dumpster that contains a discarded fish

Which of these items is the best example of the club good? Which of these items is the best example of a public good?
Briefly explain your choice(s).

Solutions

Expert Solution

Public goods are non-excludable and non-rival by nature. The enjoyment of a public good does not diminish the enjoyment of that good by others and it is impossible to restrict someone using a public good. Club goods are a type of public good that is non-rival in nature, but excludable.

A fish fillet is rival and excludable in nature as the one who paid for it can restrict others from enjoying it.

Fish in the ocean is non-excludable and non-rival in nature. Therefore it is a public good.

Exotic fish inside a large aquarium in a privately-owned building is excludable in nature as the owner can restrict people from entering. However, it is non-rival in nature. One person enjoying the view does not diminish the marginal benefit of another person enjoying it. Therefore, this is an example of a club good.

A free access dumpster containing a discarded fish is non-excludable but rival in nature.

Rahul Sunny answered 2 years ago
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