Question

4. Problems and Applications Q4

Wireless, high-speed Internet is provided for free in the airport of the city of Communityville.
At first, only a few people use the service.

In this case, the service is:

A. Not excludable and rival in consumption
B. Excludable and not rival in consumption
C. Not excludable and not rival in consumption
D. Both excludable and rival in consumption

Eventually, as more people find out about the service and start using it, the speed of the connection begins to fall.
Now the service is:

A. Not excludable and not rival in consumption
B. Excludable and not rival in consumption
C. Both excludable and rival in consumption
D. Not excludable and rival in consumption

True or False:
One possible way to solve the problem that arises from the increased usage is to charge a fee for using this service.

Answer 1

1. (C.) Not excludable and not rival in consumption.

2. (D.) Not excludable and rival in consumption.

3. True

Step-by-step explanation:

At first, the wireless, high-speed Internet provided for free in the airport of the city of Communityville is not not excludable and not rival in consumption as only a few people are using it, thereby making it a public good.

Eventually, as more people find out about the service and start using it, the speed of the connection begins to fall. Now the service is still not excludable but rival in consumption.

However, one possible way to solve the problem that arises from the increased usage is to charge a fee for using this service, which now makes it excludable.