Assignment 2

• 1. Market failure: when the forces of supply and demand fail to bring reasonable prices to consumers.

• 2. Externality: A type of market failure that results from a market exchange that leads to someone not involved in the exchange being impacted for better or worse. This can also be what's known as the spillover effectThese externalities can create market failures since the free market mis-prices goods and does not produce socially desirable level of output.

• 3. Positive externalities:

Getting an education- personal benefit of personal capital, while socially beneficial for the knowledge and specialties (doctor, lawyer, social worker).

Being a farmer- personal benefit of making money off of your land and crops, social benefit being the ability to sell that food for a profit while also providing an environment for insects such as bee's.

Being a bee keeper- personal benefit of making money off of any honey the bee's produce, the social benefit being that people can buy and consume that honey as use it for other things (honey has medical uses such as helping wounds heal and scars fade).

• Negative externalities

Driving- good for getting from point A to point B but when there is too many cars on the road and congestion grows the output of smoke from the car pollutes the air further damaging our environment ( although due to the pandemic the Earth has been healing and repairing due to the decrease in human activity)

Pollution- While there are many products that we use that help our crops grow and produce bigger and tastier food we risk damaging the ground it grows in with pesticides. Other chemicals produced from factories can damage the water and hurt local fishermen and air pollution covers our blue skies and damages peoples ability to breathe clean air.

Infrastructure- despite our need for roads and bridges in order to travel we also risk losing beautiful fertile land. With the human population growing every year we need more and more space for everyone to live. This means we use up more and more land for man made structures, maybe one day using every inch of land till there is no more nature to give up fresh oxygen.

• 4.

A. Positive: with everyone forced to quarantine the environment has a chance to heal and regrow since there is little to no one out and about to continue polluting. It also helps that staying inside decreases your chance of catching the virus meaning more people live so that more people can go back out into the work world and reestablish our economy.

B. Negative: When people consider this pandemic to be inconvenient for them and refuse to follow the CDC's guid lines for staying healthy they are not only risking themselves, but those around them. If you do not wear a mask out in public places because you don't feel the immediate effects of this virus you are putting those around you at risk, and if you pick it up while you are out you could be risking your own health and the health of your loved ones.

• 5. These are goods that only one person can consume at a time.

1. Concert/ game tickets- when you buy a certain seat no one else can get that same seat

2. Collector items- items such as special shoes, rare comic book, or vintage items that are only produced at a certain amount or not at all anymore can be considered a rivalrous good because those items are either limited edition or not in production anymore. Other people would not be able to buy those same items due to limitability.

3. House- once someone buys a particular house anyone else is then unable to buy it till it goes back on the market.

• 6. Non- rival goods are goods that can be used or consumed by one person without infringing on another's ability to buy that same item

1. DVD's- since so many copies of a movie of tv show can be produced there is enough for millions to have the same copy of a movie or tv show.

2. Phones- this item is needed in our world so many phones are produced to meet the demand so that everyone has the ability to purchase a phone.

3. Clothes- everyone has the ability to purchase any type of clothes in any fashion whether it is online or in person at a store.

• 7. excludable goods are goods that only one person can consume

1. Subscriptions- whether it's Netflix or Youtube Music Premium those who are not on the plan or have access to this service will be unable to use that service.

2. Gyms- if you are not paying for the gym services then you are unable to use their equipment for exercise.

3. Costco- if you do not own a membership to Costco you are unable to shop there.

• 8. These goods are goods which anyone and everyone has access too without infringing on another's ability to enjoy that good.

1. Nature Preserves- anyone and everyone has the ability to enjoy these places without excluding anyone.

2. Infrastructure- everyone is free to use any bridge, road, or sidewalk at any given time.

3. Parks- people are allowed to roam around a public park without the fear of having to pay for it's use.

• 9. A private (rival) good is a good that a person's consumption of this prevents someone else from consuming it. These are also known as excludable goods since if one person consumes that good they are the only ones able to consume it.

1. Food- once you buy an apple only you can eat that apple, someone else can not consume that same apple.

2. Clothes- once you buy a shirt no one else can purchase that same shirt, only you are able to wear it.

3. Technology- once you buy a phone or a television no one else can buy that same phone or tv since you have already bought and consumed that product.

• 10. Public goods or non- rival/ non- excludable goods where one person consuming a product still allows someone else to consume that same product. These are goods in which everyone has access too because they are non-excludable. These goods can result in market failure since people do not wish to pay for them, so that good is unable to be financed.

1. Parks- since everyone has the ability to enjoy this good they are unwilling to pay for it's upkeep.

2. National parks and nature preserves- everyone has access to roam around and enjoy the nature but are unwilling to pay for the upkeep of that location.

3. Social Security- everyone has a social security number and everyone pays taxes on this so that they are secured for the future after retirement. Although everyone has access to it not everyone believes it is necessary to have thus they don't wish to pay into it.

• 11. Free riders are consumers that want the benefits of a good without having to pay into them. If someone does not wish to fix the hole in the road (and the local government has not gotten around to it) they might rely on a neighbor to take it upon themselves to fix that hole. That person now doesn't have to pay for that hole to be fixed since someone else took it upon themselves to fix it up.

• 12. Common goods are goods that are rivalrous and non- excludable. Depending on if that person's consumption prevents another from consuming it then it is considered a common good. When resources are shallow from being used too often market failure can occur, this has come up with the term the tragedy of the commons.

1. Soil- once polluted or over used that soil is no longer fertile preventing anyone else from farming on that land.

2. Water- the same notion goes for water, once it is polluted anyone else is unable to drink from that water for fear of becoming ill or dying.

3. Air- once our air is polluted this can cause harmful effects on our environment stopping us from being able to stay healthy and causes respiratory problems.

• 13. It is a situation in a shared resource system where individual users who act in their own self interest act opposite to what is good for everyone but good for themselves personally. This behavior prevents others from consuming certain goods since they would be tainted by the actions of someone selfish.

• 14. These goods are excludable but are not non- rivalrous.

1. Broadway tickets- one is able to purchase a certain seat, but this does not prevent someone else from purchasing a seat until the show is sold out.

2. Gyms- being a member at a gym does mean that no one else can use that membership, but it does not prevent someone from buying their own until that gym has too many members.

3. Museums- one is able to purchase a ticket to a particular exhibit (let's say a brain exhibit at the Natural History Museum) but this does not prevent someone else purchasing a ticket to the same exhibit until it is sold out or closed.

• 15.