1. Private Goods & Services

2. What makes a good or service private? Individual must directly pay for it Owner can exclude non payers It can lose its benefit to others if it is used For example….

4. Public Goods & Services

5. What makes a good or service public? Everyone in society can use it Impractical to pay for it individually Impractical to exclude non payers Can be used as many times without reducing the benefit to others For example….

6. What are the benefits of this…?

7. You Decide

14. You sure about that last one… H:\AP Economics\Unit V (Market Failure & Role of Gov)\Fire Station Aritcle.docx H:\AP Economics\Unit V (Market Failure & Role of Gov)\Fire Station Aritcle.docx

15. When do governments decide to produce something as a public good or service? TWO FACTORS MUST BE MET!

16. 2 factors for a good or service to be public If the individual paid for the good, the benefits would be less than the cost If the government paid for the good, the total benefits to society would be greater than the cost

17. Do you think ALL education should be a private service? On a separate sheet of paper, write an economic report that answers this question. Your report should include some graphical explanations. Things to consider – Impact on quantity, price – Impact on school environment – Impact on the community – Will a shortage and/or surplus occur? – etc