AP Economics – 1/07/19

I.  Bellwork

Page 758 FYI – Explain a solution that may assist in resolving the problem

II.  Objectives:

• Characterize public goods and explain why markets fail to supply efficient quantities of public goods
• Define artificially scarce goods and explain why they are underconsumed
• Describe how government intervention in the production and consumption of these types of goods can make society better off

III.  Discussion Public Goods  P753-760

A.  Private Goods – And Others

1.  Characteristics of Goods Figure 76.1

     a.  Excludable & Rival in consumption

2. Why Markets Can Supply Only Private Goods Efficiently

             a. Free-rider Problem

B.  Public Goods (Nonexcludable & Nonrival)

1. Providing Public Goods
2. How Much of a Public Good Should Be Provided?    MSC=MSB

C. Common Resources (Nonexcludable & Rival)

1. The Problem of Overuse
2. The Efficient Use and Maintenance of a Common Resource

a. Tax/Regulate

        b. Trade-able Licenses

        c. Assign Property Rights

D.  Artificially Scarce Goods (Excludable & Nonrival)

IV.  Classwork

• -Participation 76.1  WS
• 6.1- Public Goods Practice page 2 on iLearn

AP Economics