Both public goods and common resources involve externalities.
Are the externalities associated with public goods generally positive or negative? Is the free-market quantity of public goods generally greater or less than the socially efficient quantity? Cite examples in your answer.
Are the externalities associated with common resources generally positive or negative? Is the free-market use of common resources generally greater or less than the socially efficient use? Cite examples in your answer.
3. What is cost-benefit analysis of public goods? Why is it important? Why is it hard?
Define and give an example of a common resource. Without government intervention, will people use this good too much or too little? Why?
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