1.3.3 - Public goods

Question 1

Private goods

Answer 1

• Goods that are excludable and rivalrous.

For example, in order for a consumer to ride the bus they must pay for the ticket before they enter the bus. This makes the bus excludable to those who have not bought a ticket, meaning firms can make a profit in the transportation market. Furthermore, there are only so many spaces on a bus; this means that one person’s consumption of the good can stop other people from receiving benefit from that same good/using its services. This makes the good private.

Question 2

Public goods

Answer 2

Goods that are :
● Non-rivalrous - Meaning that one person’s use of the good does not stop someone else from using it.
● Non-excludable - Meaning that you cannot stop someone from accessing the.

e.g - Streetlights, as you can not prevent someone from using the street light nor does their use prevent someone else seeing the light.

Question 3

Free Rider Problem

Answer 3

When people benefit from goods/services without paying for it.

Question 4

Why won’t the private sector provide public goods ?

Answer 4

As they can’t make a profit due to the non-excludability and non-rivalry of the good