1. 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

2. 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

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

4. 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

5. 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

6. 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

7. 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

8. Brazilian hardwood floors
CONTEMPORARY ECONOMICS: LESSON 3.3

9. 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

10. 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

11. 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

12. 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