AP®︎ Microeconomics: Topic 6.3 Flashcards

Rival means one person’s use reduces others’ use; excludable means nonpayers can be prevented from consuming.

Goods that are both rival and excludable, usually produced through normal market transactions.

Goods that are non-rival and non-excludable, so one person’s use does not limit others’ use.

When people benefit from a non-excludable good without paying, reducing private incentives to provide it.

A situation where markets underproduce socially desired goods because private incentives do not match social benefits.

Overuse of a rival, non-excludable resource because individuals act in their own self-interest.

Goods that are excludable but non-rival over some range of use, like streaming services or cable.

Public production funded mainly by taxes because private firms usually cannot profitably supply non-excludable goods.

Government sometimes supplies rival, excludable goods and makes them freely available, such as education.

The socially optimal amount occurs where marginal social benefit equals marginal social cost.

Resources that are rival and non-excludable, so overuse occurs because access is open.