1. Providing Public Goods
Chapter 3
Section 3

2. Public good –shared good or service for which it would be impractical to or inefficient to make consumers pay
Satellites, fire department, roads
How to exclude non taxpayers
Increased uses does not cost any more

3. Costs Total benefits to society must be greater than the total cost
Benefit to each individual is less than the cost that each would have to pay if it were privately provided
Free Rider – doesn’t want to pay but would still benefit
Military, fire department
Free Ride – Edgar Winter Group

4. Externalities Economic side effect Benefits to those not involved
Neighborhood home
Costs to those not involved
Chemicals in water
CMU students

5. Government Encourages positive externalities
Education – workers are more productive
Attempts to limit negative externalities
Acid Rain