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Public goods


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Public goods

  1. 1. Public Goods and Services Economics 1
  2. 2. Learning Targets <ul><li>I can define public goods, private goods, free rider, and taxes. </li></ul><ul><li>I can explain the characteristics of public goods. </li></ul><ul><li>I can compare public goods with private goods. </li></ul><ul><li>I can define and explain the free rider problem. </li></ul><ul><li>I can explain why the government provides public goods. </li></ul>
  3. 3. Modern Economies <ul><li>Most developed economies have aspects of a mixed economy. </li></ul><ul><li>Mixed economies provide goods and services through markets and through federal, state, and local governments. </li></ul><ul><li>Can you explain why a government might provide public goods? </li></ul>
  4. 4. Apple vs. Police Protection <ul><li>If you don't pay for an apple at the store, can you be kept from receiving an apple at the store? </li></ul><ul><li>If you don't pay for police protection, can you be prevented from receiving police protection? </li></ul><ul><li>Who benefits from consuming an apple? </li></ul><ul><li>Who benefits from police protection? </li></ul>
  5. 5. Private vs. Public <ul><li>Private </li></ul><ul><ul><li>Each unit produced can be priced and sold to individuals. </li></ul></ul><ul><ul><li>Each unit benefits the buyer exclusively. </li></ul></ul><ul><ul><li>Exclusions can occur. </li></ul></ul><ul><ul><li>Sold through markets. </li></ul></ul><ul><li>Public </li></ul><ul><ul><li>Consumed collectively by people whether or not they pay for the good. </li></ul></ul><ul><ul><li>Non-payers cannot be excluded from using the good. </li></ul></ul>
  6. 6. Characteristics of Public Goods <ul><li>Shared consumption-many people receive the benefits of a good or service at one time. </li></ul><ul><li>Non-exclusion-people cannot be prevented from using a good or service even if they did not pay for the good or service. </li></ul>
  7. 7. Public or Private!? <ul><li>Ice Cream </li></ul><ul><li>National Weather Service </li></ul><ul><li>Potato Chips </li></ul><ul><li>Movie </li></ul><ul><li>Fire Protection </li></ul><ul><li>Library </li></ul><ul><li>Mosquito Control </li></ul><ul><li>Personal Computer </li></ul><ul><li>Fireworks Display </li></ul>