Check Your Understanding

1. Question

   For each of the following goods, indicate whether it is excludable, whether it is rival in consumption, and what kind of good it is.

   1. a public space such as a park

      A public space is generally nonexcludable, but it may or may not be rival in consumption, depending on the level of congestion. For example, if you and I are the only users of a jogging path in the public park, then your use will not prevent my use—the path is nonrival in consumption. In this case, the public space is a public good. But the space is rival in consumption if there are many people trying to use the jogging path at the same time or if my use of the public tennis court prevents your use of the same court. In this case, the public space becomes a common resource.

   2. a cheese burrito

      A cheese burrito is both excludable and rival in consumption. Hence, it is a private good.

   3. information from a website that is password-protected

      Information from a password-protected website is excludable but nonrival in consumption. So, it is an artificially scarce good.

   4. publicly announced information about the path of an incoming hurricane

      Publicly announced information about the path of an incoming hurricane is nonexcludable and nonrival in consumption, so it is a public good.

2. Question

   Which of the goods in Question 1 will be provided by a private producer without government intervention? Which will not be? Explain your answer.

   A private producer will supply only a good that is excludable; otherwise, the producer won’t be able to charge a price for it that covers the cost of production. Thus, a private producer would be willing to supply a cheese burrito and information from a password-protected website, but unwilling to supply a public park or publicly announced information about an incoming hurricane.