Classify each of the following goods on the basis of the ...

[a0266361136]

Classify each of the following goods on the basis of the characteristics of excludability and rivalry in consumption giving appropriate reasons: a) A lighthouse b) A pair of shoes c) A paid Web site d) A congested non-toll road
 
  What will be an ideal response?

Question 2

The cost to a physician of tending a patient is
 
  A) dependent on the number of years over which the physician practices.
  B) higher for a recent medical-school graduate than for a physician with a well-established practice.
  C) the value of the time when spent in its next best use.
  D) zero under a system of complete and comprehensive medical insurance.

[aprice35067]

Answer to Question 1

a) A lighthouse is non-excludable in consumption because nobody can be prevented from using it. It is also non-rival in consumption because its use by one person will not reduce the quantity available to others.
b) A pair of shoes is excludable in consumption because anybody who does not pay for it can be prevented from using it. It is also rival in consumption because it can be used by only one person at a time.
c) A paid Web site is excludable but non-rival in consumption because anybody who does not pay for its use can be prevented from using it but its use by one person will not restrict its use by others.
d) A congested road is non-excludable but rival in consumption because even though nobody can be excluded from its use, its use by one individual will reduce the space available for others.

Answer to Question 2

C

[a0266361136]

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[covalentbond]

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