ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Goods that are rival in consumption but not excludable.
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A parable that illustrates why common resources are used more than is desirable from the standpoint of society as a whole.
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Either A or B
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None of the above
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Detailed explanation-1: -Common goods are non-excludable and rival. Examples of common goods are coal and timber because they can only be possessed or consumed by a single user at one time but access is not restricted.
Detailed explanation-2: -Common resources are rival in consumption and non-excludable. An example is that of fisheries, which harvest fish from a shared common resource pool of fish stock.
Detailed explanation-3: -A common resource is an non-excludable but rival good; that is, a good that people cannot be prevented from using but where one person’s consumption of the good diminishes another person’s consumption of it. See Non-excludable Good and Rival Good.
Detailed explanation-4: -For example, a person who buys a car can only use it for himself and restrict others from using it. Buying petrol and putting it into the fuel tank is an example of a rivalrous good because it affects the supply available for other consumers. The situation also portrays petrol as an excludable good.
Detailed explanation-5: -Rivalry-A common resource is a rival good because as one person uses the resource, it decreases the value of it or the quantity available for others. Compared to a non-rival good which does not decrease the value or quantity.