Answer to Question #317766 in Macroeconomics for Ram

Question

Explain the two characteristics of Public goods; a) Non-rivalrous and b) low degree of

excludability. How does the Idea behave like a public goods? Explain the problems

associated with the nature of Data on Ideas. (Romer Model)

Answer 1

A public good is goods that no individual can be excluded from benefiting. Non-rivalrous means that the goods are not fewer in supply as more people consume them while non-excludability means that the good is readily available to all citizens. Low degree of excludability goods are characterized by: everybody benefits from such goods and customers cannot be directly charged.

Non-rivalrous goods are characterized by; being accessible to all and some are private goods.

 

ideas are non-rival; therefore, they are different from nearly different from other goods. An idea is a new discovery on how to produce new goods.

The difference between physical capital and human capital is not distinct is a challenge when it comes to the nature of ideas