Differentiate between Public and Private goods. Make sure you state their characteristics and substantiate your answer with examples in each case.
http://www.econport.org/content/handbook/Market-Failure/Public-Goods/PRIV-V-PUB.html
Public goods and private goods are two different types of goods that exist in an economy. Let's look at their characteristics and examples to understand the differences between them.
1. Public Goods:
Public goods are non-excludable and non-rivalrous in nature. This means that once provided, they are available for all individuals to consume, and one person's consumption does not reduce the availability for others. The consumption of a public good by one person does not diminish its availability for others.
Characteristics of Public Goods:
a. Non-excludable: It is not possible to exclude anyone from consuming a public good once it is provided.
b. Non-rivalrous: The consumption of a public good by one person does not reduce its availability for others.
c. Public provision: Public goods are typically provided by the government or a collective entity.
Examples of Public Goods:
a. National defense: Once provided, national defense benefits everyone in society and is available regardless of individual contributions.
b. Street lighting: The illumination provided by street lights benefits all individuals in the area without exclusion.
c. Public parks: The utilization of public parks is open to all and does not reduce availability for others.
2. Private Goods:
Private goods are excludable and rivalrous in nature. This means that they can be owned or consumed exclusively by an individual or group, and one person's consumption reduces the availability for others.
Characteristics of Private Goods:
a. Excludable: It is possible to exclude someone from consuming a private good if they do not pay for it or have the required access.
b. Rivalrous: The consumption of a private good by one person reduces its availability for others.
c. Market provision: Private goods are typically provided by private individuals or businesses for a price.
Examples of Private Goods:
a. Food: Food can be purchased and consumed by individuals, and once consumed, it is no longer available for others.
b. Clothing: Clothing can be individually owned and used, and once being worn by one person, it cannot be simultaneously worn by another.
c. Cars: Cars can be privately owned and used by individuals or groups, and only those who own or rent them can use them.
In summary, public goods are non-excludable and non-rivalrous, while private goods are excludable and rivalrous. Public goods are typically provided by the government or collective entities and benefit the entire society, while private goods are provided by private individuals or businesses for a price and are consumed exclusively by individuals or groups.