Quiz 5: Economics of Crime and Its Prevention: How Much Is Too Much

Business

In order to keep from disproportionately criminalizing citizens, the concept of crime has to be looked at from an unbiased, analytical standpoint. It could be easy to simply define crime as "anything that is wrong" or "anything that causes someone else to be victimized". From this morality-based point of view, every misbehavior would be subject to legal and penal action of some sort because there would always be someone who felt that they were a criminal act. As one might imagine, this might lead to a lot of prisons and penitentiaries exceeding their capacity. As a result, assigning crimes are restricted to a purely legal standpoint. By checking to see if any major laws have been broken, certain acts that might be seen as immoral (like drinking alcohol, gambling, or engaging if "unconventional" acts with one's significant other) are not in and of themselves punishable by law. Of course, it falls to the legislature to ensure that the laws drafted are not petty or unreasonable in the first place.

The three categories of goods and services: private, semiprivate, and public, are classified by their exclusivity and their rivalry. In other words, they are grouped based on whether only certain consumers can directly benefit while others do not benefit, and whether the consumption of a good or service by one or more users reduces consumption by other users. Private goods are considered to be exclusive rival goods. This is because they directly benefit certain consumers while preventing other consumers from using them; their consumption also limits or eliminates their availability to other consumers. Food, water, and other ingestible items are examples of private goods. Private goods fully satisfy the requirements for exclusivity and rivalry. Semiprivate goods are goods that partially satisfy exclusivity and rivalry. They may satisfy one category but not the other. A person who decides to cosmetically upgrade their car would be receiving a private benefit, since they are the only one who can wholly appreciate the upgrade. However, this does not prevent others from benefitting, particularly if other individuals rely on this person for a ride. This would be especially true if the person uses their vehicle for a driving service like Lyft or Uber. Similarly, a tutor providing extra help to a struggling student would satisfy the rivalry requirement because they can only tutor certain people as according to their schedule. However, this does not prevent other students from hiring the same tutor at a different time or enhancing their learning through other means. Public goods do not satisfy exclusivity or rivalry conditions. They benefit all consumers when they are offered. Public service announcements or weather warning systems are examples of public goods.

Sometimes, consumers are able to legally or illegally obtain goods and services without paying any of the costs for the product. These consumers are known as free riders. This can be a problem for resource allocation; if the markets are unable to effectively control illegal free riding, they will face a greater cost as they try to replace the resources and products that were consumed. In cases of public goods and services, no one can be excluded from obtaining these services. This leads a difficulty in properly allocating these resources.