8.3 - Private goods, public goods and quasi-public goods Flashcards
(18 cards)
What is a private good?
a good that is excludable and rival
What is excludable good?
people who do not want to pay for the good can be excluded form benefiting from it
What is an example of an excludable good?
private property rights, if a shop owner doesn’t want people consuming without paying.
What is a rival good?
when one person consumes a private good, the quantity available to others goes down
What is one example of a rival good?
if you eat a sweet, there may not be one for another person if there were only 3 sweets and you have 4 friends including you
What is a public good?
a good that is non-excludable, non-rival
What is an example of a public good?
flood defences, as if someone builds them, they cannot limit how much someone can benefit from it and also they cannot force people to pay for it even though they may benefit from it.
What are some more examples of a public good?
-national defence, police, street lights, TV and radio programmes
why is national defence a public good?
- non rival; receiving benefits of defence does not inhibit others
- non excludable; providing the benefits for one means providing it for all people
What is an economic ‘good’?
something that when consumed (if a consumer good) yields usefulness or utility.
What is an economic ‘bad’?
something that yields disutility or dissatisfaction or displeasure.
What is a public bad?
ie rubbish that is just left out
What causes the public bad?
free rider problem - people will pay for the removal of rubbish but this can be avoided by just leaving it on the pavement
What is a quasi public good?
a good that is not fully non-rival where it is possible to exclude people from the service
What is an example of a quasi public good?
street lights, roads, TV and radio…
- can be provided by markets, but optimal level of consumption occurs when they are free
How have roads changed over the years?
used to be public good now is quasi public
How has technology changing meant that they have become quasi public?
non excludable because in order to use the road you have to pay for it, all motorists have to pay to use the road (ie road tax..)
