Posted by Mankiw on Thursday, January 5, 2012 at 12:29pm.
4. Wireless high speed internet is provided for free in the airport of the city of communityville.
a) At first, only a few people use the service. What type a good is this and why?
It’s a public good because it is neither excludable nor rival in consumption.
b) Eventually, as more find out about the service and start using it, the speed of a connection begins to fall. Now what type of a good is the wireless Internet service?
Common resource because it is rival in consumption but not excludable.
c) What problem might result and why? What is one possible way to correct this problem?
The internet will become so slow that no one will be able to use it. They can convert it to a club good and charge for access to the internet so there is not so many people on at one time.
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