Learning Objective: Today I will be able to compare the results of private and public goods by creating a matrix that shows externalities of goods. Agenda: Learning Objective Lecture: Ch. 2.3 Public Goods & Externalities Matrix Chart Exit Slip

CONTEMPORARY ECONOMICS: LESSON 3.3 Title Notes: Ch. 3.2 Public Goods & Externalities Exclusive= product available to those who pay Rival= the consumption of one prevents others to consume the product. CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3  Private goods Rival & Exclusive Goods with two features: 1. the amount consumed by one person is unavailable to others non-payers can easily be excluded What are examples of private goods? CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Public goods goods that, once produced, are available to all, but nonpayers are not easily excluded. Both nonrival and nonexclusive. Available for all to consume, regardless of who pays and who doesn’t. What are examples of a public good? CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Quasi-public Goods Goods that are nonrival but exclusive are called quasi-public goods – for example radio, television, YouTube. CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Open-access Goods  Goods that are rival but nonexclusive are called open-access goods – like fishing in the ocean. By imposing restrictions on open-access resource use, governments try to keep renewable resources from becoming depleted. What are examples of open-access goods? CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Negative externalities generally are by-products of production or consumption that impose costs on third parties (those who are neither buyer nor seller in the transaction). CONTEMPORARY ECONOMICS: LESSON 3.3

Brazilian hardwood floors CONTEMPORARY ECONOMICS: LESSON 3.3

Correcting for Negative Externalities Government restrictions can improve the allocation of open-access resources (renewable resources.) Ex. Antipollution laws Water quality restrictions CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Positive externalities occurs when the by-products of consumption or production benefit third parties (those who are neither buyer nor seller in the transaction). Ex. Gov. provides free education, everyone in society can benefit from an educated person. Gov. provides free vaccine, prevents others from getting sick CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Matrix Chart + Externalities - Externalities Private Goods Public Goods Quasi-Public Goods Open-Access Goods Step 1: Provide two examples of a product that is: Private Public Quasi-Public Open-Access Step 2: One example should provide a positive externalities & the other example should provide negative externalities. CONTEMPORARY ECONOMICS: LESSON 3.3

CONTEMPORARY ECONOMICS: LESSON 3.3 Exit Slip How does government involvement in regulating public, private, quasi-public, & open-access goods affect externalities (negative & positive)? CONTEMPORARY ECONOMICS: LESSON 3.3