Discussion Forum#1

Dear Class!!!

Most of you answered the discussion question# 1, but you have to use at least 250 words answering the question. Please, try to give a more detailed answers and try to participate more actively in the discussions. Responses to classmates must be at least 3-4 sentences and must demonstrate that you have read the posting.

You can find my opinion about this question below:

Public goods are nonrival (one person’s consumption does not prevent consumption by another) and nonexcludable (once the goods are produced nobody—including free riders—can be excluded from the goods’ benefits). If goods are nonrival, there is less incentive for private firms to produce them – those purchasing the good could simply allow others the use without compensation. Similarly, if goods are nonexcludable, private firms are unlikely to produce them as the potential for profit is low. The free-rider problem occurs when people benefit from the public good without contributing to the cost (tax revenue proportionate to the benefit received). The U.S. border patrol is a public good – my use and benefit does not prevent yours. Satellite TV is a private good – if the dish, receiver, and service go to my residence it can’t go to my neighbors. The fact that I could invite my neighbor over to watch does not change its status from being a private good.


Discussion Question#2

Dear Class!!!

Why is it difficult to distinguish between frictional, structural, and cyclical unemployment? Why is unemployment an economic problem? What are the consequences of a negative GDP gap? What are the noneconomic effects of unemployment?

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