Private Goods: Public Goods

Private goods: goods that when consumed by one individual cannot be consumed by another. Exclusion principle states that before using a good or service the person must pay first. Ex: Private goods: clothes and food Ex: Private service: insurance, medical services, auto care, telephone

Public goods: Goods and services that can be consumed by one person without preventing the consumption of the good by another. Ex: parks, libraries, highways, street lighting. Because public goods are things the private sector would not want to provide the government assumes responsibility. In order to pay for them the government raises money through taxes.

Externalities ( left out, omitted, barred, prohibited) : the unintended consequences of business transactions. Ex: bonuses paid to employees. The external consequence is now people have more money to spend and restaurants and stores may see their sales go up. The businesses experienced externalities –they did not pay the bonus but were affected by it. Public goods produce positive externalities for the communities and societies they serve. Negative externalities are when an action harms the community, environment, etc. Government regulatory agencies are responsible to help prevent and deter these externalities.

FEDERAL AGENCYRESPONSIBILITY Environmental Protection Agency- EPA Centers for Disease Control and Prevention- CDC Occupational Safety, and Health Administration- OSHA National Institutes of Health- NIH Food and Drug Administration-FDA Federal Trade Commission Fill in the responsibility column p. 632 in textbook.

Govt. Responsibilities to Citizens