Download Public Good - VesperEconomics

Private Goods & Services
What makes a good or service private?
• Individual must directly pay for it
• Owner can exclude non payers
• It can lose its benefit to others if it is
used
• For example….
Public Goods & Services
What makes a good or service public?
•
•
•
•
Everyone in society can use it
Impractical to pay for it individually
Impractical to exclude non payers
Can be used as many times without
reducing the benefit to others
• For example….
What are the benefits of this…?
You Decide
You sure about that last one…
• H:\AP Economics\Unit V (Market Failure &
Role of Gov)\Fire Station Aritcle.docx
When do governments decide to
produce something as a public good
or service?
TWO FACTORS MUST BE MET!
2 factors for a good or service
to be public
If the individual paid
for the good, the
benefits would be
less than the cost
If the government
paid for the good, the
total benefits to
society would be
greater than the cost
Do you think ALL education should be a
private service?
• On a separate sheet of paper, write an
economic report that answers this question.
• Your report should include some graphical
explanations.
• Things to consider
– Impact on quantity, price
– Impact on school environment
– Impact on the community
– Will a shortage and/or surplus occur?
– etc