Question

Determine whether each of the following goods is a private good, a public good, a common resource, or a club good.

Answer 1

Answer:

1. A free weight station in a fitness room that is open to the public (common resource)

2. A large, beautiful fountain in a town square (public goods)

3. A new drum set for you to play in your friend's band (private good)

Explanation:

Before we look into the different types of goods, let us define the terms associated with goods:

Rival: A good is said to be rival, if its consumption by one consumer prevents simultaneous consumption by another consumer.

Excludable: An excludable good is one for which access is not provided by the owner or seller, to a consumer who has not paid for it or who has not met certain requirements for its use.

Now let us define the different types of goods:

a. Private goods: these goods are excludable and rival. This means that the owners can prevent certain individuals from using them and their use prevents simultaneous use by other consumers. These goods are usually limited in quantity. in our example, A new drum set for you to play in your friend's band meets these requirements. other examples include food, clothes et.

b. public good: these goods are non-excludable and non-rival. These goods can be used simultaneously by many individuals and restrictions to use are virtually absent on them.  A large, beautiful fountain in a town square meets these criteria. other examples include air, street lights etc.

c. common resource: These products are non-excludable (restriction to use is absent) and rival (use by an individual can prevent simultaneous use by others). if an individual is using A free weight station in a fitness room that is open to the public, other individuals will have to wait for their turn, even if they do not pay for it.

d. club good: these goods or services are excludable (paid for before use) but non rival (multiple consumers can use them simultaneously).  Examples include cable television, internet services, cinemas etc.