1. 3.3 - Objectives Standard Address
12.1 Students understand common terms & concepts and economics reasoning.
3.3 - Objectives
Describe and provide examples of four types of goods.
Define negative externalities and positive externalities, and discuss why government intervenes in such markets.

2. A BULLDOG ALWAYS
CARES
Commitment
Attitude
Respect
Encouragement
Safety

3. Standard Addressed:
12.1 Students understand common terms & concepts and economics reasoning.
CONTEMPORARY ECONOMICS: LESSON 3.3

4. LESSON 3.3 Public Goods and Externalities
Key Terms
LESSON 3.3 Public Goods and Externalities
private goods
public goods
quasi-public goods
open-access goods
negative externalities
positive externalities
CONTEMPORARY ECONOMICS: LESSON 3.3

5. Private Goods Private goods—Rival & Exclusive goods with two features
1. the amount consumed by one person is unavailable to others
2. nonpayers can easily be excluded
CONTEMPORARY ECONOMICS: LESSON 3.3

6. Public Goods
Public goods—goods that, once produced, are available to all, but nonpayers are not easily excluded.
CONTEMPORARY ECONOMICS: LESSON 3.3

7. Public Goods Both nonrival and nonexclusive.
Available for all to consume, regardless of who pays and who doesn’t.
CONTEMPORARY ECONOMICS: LESSON 3.3

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

9. 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.
CONTEMPORARY ECONOMICS: LESSON 3.3

10. Name the four categories of goods, and provide an example of each.
Checkpoint: pg.77
Name the four categories of goods, and provide an example of each.
Private goods are those that are rival in consumption, such as _____.
Public goods are nonrival in consumption, such as _____.
Quasi-public goods are nonrival but exclusive, such as _____.
Open-access goods, are rival but not nonexclusive, such as ____.
CONTEMPORARY ECONOMICS: LESSON 3.3

11. Negative Externalities
Negative externalities generally are by-products of production or consumption that impose costs on third parties.
CONTEMPORARY ECONOMICS: LESSON 3.3

12. Brazilian hardwood floors
CONTEMPORARY ECONOMICS: LESSON 3.3

13. Correcting for Negative Externalities
Government restrictions can improve the allocation of open-access resources.
CONTEMPORARY ECONOMICS: LESSON 3.3

14. Correcting for Negative Externalities
Government restrictions.
Antipollution laws
Water quality restrictions
CONTEMPORARY ECONOMICS: LESSON 3.3

15. Correcting for Negative Externalities
Government restrictions.
Noise restrictions
Local zoning laws
CONTEMPORARY ECONOMICS: LESSON 3.3

16. Positive Externalities
Positive externalities occur when the by-products of consumption or production benefit third parties.
Education generates positive externalities.
CONTEMPORARY ECONOMICS: LESSON 3.3

17. Checkpoint: pg.80
What are negative externalities and positive externalities, and why does government intervene to regulate them?
Negative externalities are by-products of consumption that impose a cost on third parties.
Positive externalities occur when the by-product of consumption benefit third parties.
Governments intervene to protect these third parties who are indirectly involved.
CONTEMPORARY ECONOMICS: LESSON 3.3

18. Assessment
Key Concepts
CONTEMPORARY ECONOMICS: LESSON 3.1