Fill in the matrix and describe differences in public and private goods, common resources, and natural monopolies. Use your book and the Tomlinson video tutorials as a tool to help you answer questions about market structures.
ExampleIs there a rival in consumption?Is it excludable?
The air we breatheNo, the air we breathe can’t be taken away from one person and given to another personNo Common Resource
FishingYes, depending on if there are other people fishing at the same time preventing one from catching fishNo Natural Monopoly
ElectricityNoYes, as companies charge a fee for the services
1. What is the difference between a public good and a private good? Public Goods are described as goods that are non-excludable, which means that these goods are not separated into groups of purchasers and non-purchasers. An example of a Public Good would be Public Lighting on the streets of neighborhoods, parking lots etc. These goods are provided to everyone without payment, which makes it a non-excludable resource.
Private Goods are the opposite of Public Goods as they are goods that can’t be used after consumption. These goods also can be made to be paid for. An example of a Private Good would be a pizza from the local pizzeria. This good can’t be sold again after it is gone. In order for someone to purchase a pizza, they’d have to buy another one.
2. What is a common resource?
A Common Resource refers to a rival good that is non-excludable.
3. What is a natural monopoly?
A Natural Monopoly refers to an industry that is able to control the entire market of a good at a lower cost due to have little to no competition.