using it.For example.the use of water by one consumer restricts its use by another.Since private marginal cost is below social marginal much h of the by the individual user ereating an inefficient outcome.Each individual using the common property resource considers only his own actions and does not consider how all of the users collectively are impacting the resource. 10.Public goods are both nonrival and nonexclusive.Explain each of these terms and show clearly how they differ from each other A good is nonril if for any level of production,the marginal cost of providing the good to an additional consume production oost of an additional unit oould be greater than zero). A good is nonexclusive if it is impossible or very expensive to exclude individuals from consuming it.Public goods are nonrital and nonexclusive.Commodities can be (exclusive and rival (2)exclusive and nonrival.(3)nonexclusive and rival,or (4)nonexclusive and nonrival. Most of the modities in the text to this point have been of the first type.In thi chapter,we focus on commodities of the last type. Nonrival refers to the production of a good or service for one more customer. It usually involves a production process with high fixed costs such as the cost of building a highway or lighthouse.(Remember that fixed cost depends on the period:the cos of lighting the lamp at the lighthouse can vary over time,but does not vary with the number of consumers.)Nonexclusive refers to exchange.where the cost of charging consumers is pmohibitive.Incurring the cost of identifving consumers and collecting from them would result in losses.Some economists focus on the property of publie gods because it is this characteristic that poses the most significant problemsfor eficient provision 11.A village is lo ocated next to 1000 acres of prime grazing land The village presently owns the land and allows all residents to graze cows freely.Some members ofthe village council have suggested that the land is being overgrazed Is this likely to be true?These same members have also suggested that the village should either require grazers to rchase an annual pe nit.or sell off the land to the e grazers.Would either of these be a good ide It is true that the common land is likely to be overgrazed since each individual will their own private co and not the true o cost of grazing.The social cost of grazing is likely to be higher than any one individual's private cost because no one individual has an incentive to take into account how his For individual co zing affects the opp ecide tunities ofothers to graz ain areas durin certain time s of the year,while preserving other areas for other timeso the year.However,the individual will not do this if the resource is common property as any other grazer can come along and freely disrupt using it. For example, the use of water by one consumer restricts its use by another. Since private marginal cost is below social marginal cost, too much of the resource is consumed by the individual user, creating an inefficient outcome. Each individual using the common property resource considers only his own actions and does not consider how all of the users collectively are impacting the resource. 10. Public goods are both nonrival and nonexclusive. Explain each of these terms and show clearly how they differ from each other. A good is nonrival if, for any level of production, the marginal cost of providing the good to an additional consumer is zero (although the production cost of an additional unit could be greater than zero). A good is nonexclusive if it is impossible or very expensive to exclude individuals from consuming it. Public goods are nonrival and nonexclusive. Commodities can be (1) exclusive and rival, (2) exclusive and nonrival, (3) nonexclusive and rival, or (4) nonexclusive and nonrival. Most of the commodities discussed in the text to this point have been of the first type. In this chapter, we focus on commodities of the last type. Nonrival refers to the production of a good or service for one more customer. It usually involves a production process with high fixed costs, such as the cost of building a highway or lighthouse. (Remember that fixed cost depends on the period under consideration: the cost of lighting the lamp at the lighthouse can vary over time, but does not vary with the number of consumers.) Nonexclusive refers to exchange, where the cost of charging consumers is prohibitive. Incurring the cost of identifying consumers and collecting from them would result in losses. Some economists focus on the nonexclusion property of public goods because it is this characteristic that poses the most significant problems for efficient provision. 11. A village is located next to 1000 acres of prime grazing land. The village presently owns the land and allows all residents to graze cows freely. Some members of the village council have suggested that the land is being overgrazed. Is this likely to be true? These same members have also suggested that the village should either require grazers to purchase an annual permit, or sell off the land to the grazers. Would either of these be a good idea? It is true that the common land is likely to be overgrazed since each individual will consider only their own private cost and not the true social cost of grazing. The social cost of grazing is likely to be higher than any one individual’s private cost because no one individual has an incentive to take into account how his grazing affects the opportunities of others. For example, one individual could decide to graze only in certain areas during certain times of the year, while preserving other areas for other times of the year. However, the individual will not do this if the resource is common property as any other grazer can come along and freely disrupt