1. LECTURE #10: MICROECONOMICS CHAPTER 11 Different Kinds of Goods Importance of Property Rights

2. Different Kinds of Goods Two Properties Excludable: Person can be prevented from using good Rival in Consumption: Use by one diminishes use by others All goods can be categorized by the presence or absence these properties

3. 4 Different Kinds of Goods Private Goods Excludable and rival in consumption Examples: clothing, airline seat Public Goods Not excludable and not rival in consumption Examples: national defense, public transportation, unemployment benefits Problem of Cost-Benefit Analysis Which public goods should government provide and who should be eligible? How can costs be determined and how can benefits be valued?

4. 4 Different Kinds of Goods Common Resources Rival in consumption and not excludable Examples: fish and game, wild berries Natural Monopoly Excludable & Not rival in consumption Examples: Cable TV, government regulation

5. Different Kinds of Goods Free Rider Problem Receiving a benefit without paying for it Examples: pirated software, hitching a ride

6. Importance of Property Rights A property right is the exclusive authority to determine how a resource is used Three Attributes of Private Property Rights The exclusive right to choose the use of a resource The exclusive right to the services of the resource The right to delegate, rent or sell any portion of the rights by exchange or gift at whatever price the owner determines.

7. Importance of Property Rights Should the Government be able to abolish private ownership in interest of equity? Social versus Private Incentives Externalities: excludability, rivalry in consumption Can government be a good manager of the common good? FSLIC and bank management Bailouts Preservation of wildlife Fundamental Purpose of Property Rights Eliminate destructive competition for control of [economic] resources Eliminate the problems of fuzzy ownership

8. Homework Questions for Review: 1, 2, 4 Problems and Applications: 1, 4, 11