Public and Private Goods

Question 1

Private Goods

Answer 1

The ordinary things we buy and consume.

Question 2

Public Goods

Answer 2

Available to all and their usage cannot be purchased.

Question 3

Define Non-Rival

Answer 3

Consumption by one consumer does not restrict consumption by other consumers. Marginal cost of supplying a public good to an extra person is zero

Question 4

Define Non-Excludable

Answer 4

Non-payers can enjoy the benefits of consumption at no financial cost.

Question 5

Define Non-Rejectable

Answer 5

Cannot be rejected by people. E.g. nuclear defence system.

Question 6

3 Main Characteristics of a Public Good

Answer 6

1. Non-rival
2. Non-excludable
3. Non-rejectable