Last week we had our second business quiz and a discussion based on the questions. The answers of the questions we found at the end of the discussion are as follows:
Resources are taken under control
Ownership of strategic resources is necessary.
Country might lack capital.
Protection of the public-police, justice, jail
If smt goes wrong in the prison you say talk to the firm.
2)What is a public good?
When you consume a public good it doesn’t become less. Non excludability. Just because someone uses a service it doesn’t mean that others cannot. The service provided to everyone is equal.
Non- rivalrous.
Provided equally to everybody so that people won’t compete with each other.
E.g. If I enjoy a benefit of a light house you don’t have to enjoy less.
Private investors have no reason/incentive to provide public goods because of the free rider problem
Private investors have no reason/incentive to provide public goods because of the free rider problem
3)What makes a firm efficient? Management or ownership
Management.
4) What are merit goods?
A good which is generally considered to be a good for everybody but private sector won’t provide it for everybody. Because they earn a profit from it. Not everyone can afford it if it is provided only by the private sector. So the public sector provides it for everybody to benefit from it.
E.g. schools.
Public good- owned by the government
Merit good- owned by public (free or reduced prices) and private sector(not everyone can afford)
Franchisor- IB
Franchisee-KOÇ
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