Ch.+3.3


 * Ch. 3.3 Questions #1-6 & Notes**

Questions #1-6 > Government aims to limit negative externalities such as acid rain, to prevent this they now require car companies to have a catalytic converter.
 * Public Goods**
 * **Public good**- A shared good or service for which it would be inefficient or impractical (1) to make consumers pay individually and (2) to exclude non-payers
 * to simplify the funding of government projects in the public interest, the government collects taxes
 * As a society, we believe that certain facilities or services should be available to all
 * Most goods are public simply because a private provider could not charge those who benefit or exclude non-payers from benefiting
 * Costs and Benefits**
 * the federal government steps in to act in the public interest whenever it determines that the benefits of a policy outweigh the drawbacks
 * cost is critical in determining whether something gets produced as a public good
 * 1. the benefit to each individual is less than the cost that each would have to pay if it were provided privately, and
 * 2. the total benefits to society are greater than the total cost
 * Public goods are financed by the **public sector,** the part of the economy that involves the transactions of the government
 * The **private sector**, the part of the economy that involves transactions of individuals and businesses, would have little incentive to produce public goods
 * Free-Rider Problem**
 * A **free rider** is someone who would not choose to pay for certain good or services, but would get the benefits of it anyways if it were provided as a public good
 * free riders consume what they do not pay for, this problem suggests that if the government stopped collecting taxes and relied on voluntary contributions, many public services would be eliminated
 * Market Failures**
 * Free riders are examples of **market failure,** a situation in which the market, on its own, doe not distribute resources efficiently
 * Externalities**
 * **Externality**- Is an economic side effect of a good or service that generates benefits or costs to someone other than the person deciding how much to produce or consume
 * externalities can be positive or negative
 * a positive externality is when public goods generate benefits to many people, not just those who pay for goods
 * a negative externality is when part of the cost of producing a good or service is to be paid for by someone other than the producer
 * Government Goals**
 * Government encourages positive externalities, educations is an example because it it benefits students, yet society as a whole benefits from an educated population, because educated workers are generally more educated
 * Government aims to limit negative externalities such as acid rain, to prevent this they now require car companies to have a catalytic converter
 * 1) Public goods make positive externalities because it benefits many people not just those who pay for the good
 * 2) A free rider is a type of market failure because they are not participating in the free market and are not paying taxes which means less money in the budget
 * 3) A public sector is the part of the economy that the government controls- examples are building roads, scientists, engineers ect. A private sector is the part of the economy that involves transactions of individuals and businesses, examples are: Apple Inc, Stores
 * 4) Government encourages positive externalities, educations is an example because it it benefits students, yet society as a whole benefits from an educated population, because educated workers are generally more educated.
 * 1) Yes it is a public good because it is something that is financed by the government for the people.
 * 2) I think they should leave it to the private sector because it is their responsibility to solve problems like this that have to do with their business.