Label the goods as Private Goods (PRI), Common Resources (CR),...

Question

Label the goods as Private Goods (PRI), Common Resources (CR), Club Goods (CG), or Public Goods (PUB).

Table listing various goods for classification in macroeconomics: private, common, club, public.

Accepted Answer

Alright. Let's go ahead and label these goods as private goods, public goods, common resources, and club goods. Okay? So remember when we've got these goods, we're gonna think of the 2 traits. Right? We've got, the traits of excludability, excludable or non excludable, and over here we'll have the rival or non rival. Right? We're gonna be basing them on these traits. So when it's rival and excludable that's when we get a private good. Right? When it's rival and non excludable, we get a common resources. Excludable and non rival, that's where we have our club goods and non excludable and non rival, that's our public goods over here, right? So based on that information, let's go ahead and go 1 by 1 and let's do these, these goods. So first we have a steak dinner, right? What do we think when we got a steak dinner? Well is it rival? First of all, yeah right? If I eat the steak dinner, you can't eat the same steak dinner, right? There's only one of them and one person has to eat it. So it is rival. How about excludable? Yeah, generally you're gonna have to pay for the steak dinner, right? There's a way to prevent people from eating the steak dinner and that's by them not having paid. So it is rival and excludable. We're gonna see that a steak dinner is a private good. I'll put p r I there for private goods, right? We've got these acronyms at the top that we'll use. So steak dinner is a private good. Let's go down the row here to the fireworks show. So what about a fireworks show? Alright, let's think about that. Is it rival or let's start with excludable. Is it excludable or non excludable? Well, it's kind of tough to exclude someone from a fireworks show, right? They would have to probably build like some giant wall or something to keep people from seeing the fireworks, right? In general, fireworks you can kind of just see from anywhere. So I would say that fireworks are pretty much non excludable, right? It's kind of hard to keep someone from seeing them. And how about rival versus non rival? Well, me watching a fireworks show doesn't stop you from enjoying it also, right? So we can both enjoy the same fireworks show without it affecting, the other one. So it's non rival. We see a non rival, nonexcludable good here. So we're gonna say that this fireworks show is a public good. Cool? Let's go on to the next one. Forest Lumber. How about Forest Lumber? In this case, is it excludable or non excludable? Well, in this case right, it's non excludable, right? Someone can go to the forest and just chop down a tree, right? In the absence of any specific laws, you can just kind of go out there and chop a tree down. You can't really exclude someone from using that forest and getting some lumber. But what about rival and non rival? Well in this case right, if I chop the tree down, you can't chop that same tree down, right? We are rival in consumption for that tree. So it is going to be rival and non excludable here. We're going to have a common resources, so I'm going to put CR for a common resource there. How about traffic signals? Well traffic signals, are they excludable or non excludable? Here we see that they're non excludable, right? Because me using a traffic signal and waiting for a red light or a green light doesn't stop you from using that same traffic signal, right? We can use the same traffic signal and it doesn't, or excuse me that would be non rival, right? Because we're using the same traffic signal and, it doesn't affect the other one, right? That's when it's a non rival, we can both use the same amount of the good. It's non excludable because there's no way to prevent someone from using the traffic signal, right? It's there, it's available for us to use to direct through traffic, so you can't exclude someone there. It's non excludable. Non excludable and non rival, we're gonna have a public good here. Cool. Let's go on to the US Census data. Top of the next row. So the US Census data, is that excludable or non excludable? Well US Census data is just public information. The government goes goes and gets all this data from all of the residents and then it makes it publicly available because it knows that this kind of information is very useful to a lot of different people and a lot of different businesses. So it's non excludable, right? They don't keep anybody from accessing this information and it's non rival also, right? Me accessing the information doesn't take it away from you. We can both access the same quantity of information and it doesn't affect either of us. So it's non rival and non excludable. We have another public good here. How about computer software? Computer software is excludable, right? You usually have to pay to get software. So we're gonna have excludable good there, and is it rival or non rival? Well in this case, right, it's non rival, right? Me using the software doesn't stop you from using the same software, right? Their software is very easily replicated, there's no extra cost to the company providing the software, right? When you get a copy of Windows, everyone's using the same copy of Windows, right? It's just essentially a serial number that you have or something like that. So we have a non rival situation here and it's excludable. So we've got a club good, right? This is a club good. You have to join the club of the software company to get access here. So computer software is a club good. How about a pair of shoes? So a pair of shoes, right? If I'm wearing a pair of shoes, you can't wear that same pair of shoes. We're gonna be rival in consumption for that pair of shoes. So we're rival there and is it excludable? You usually have to pay for shoes, right? So it's gonna be excludable and rival there. We've got a Private good. How about an uncongested toll road? So we talked about this one a little bit right? So a toll road is excludable right? Because you have to pay to go on the toll road. So it's an excludable good. How about rival or non rival? When it's uncongested, right, it doesn't matter that you're on the road, I can get on the road and you're not gonna affect me, right? There's no traffic, I can get on the road and use it just the same. So it's non rival in that case, right? Non rival and excludable, we've got a club good. Cool. I love this, we've got a lot of examples here right? This is great. Let's go on to this next one. City Sewer System. How about the city sewer system? In this case, is it excludable or non excludable? Generally everyone's connected to the city sewer system right? It's non excludable, you build a house you generally connect it to the sewer system, it's gonna be non excludable in that case. And is it rival or non rival? Well my use of the sewer system doesn't really affect your use, right? We both put all our waste into it. It's non rival. There's just the one sewer system that we all use together, it's non rival and non excludable, we've got a public good here. Cool. Go on to this car, how about a car? Well it's gonna be rival right because if I use the car, you can't use the same car right? We're gonna fight for I guess the driver's seat, right? There can only be 1 person driving this car right? We're gonna be rival in consumption. Yes, we can carpool, but the idea is that only one person can be like this is where we're going, this is rival in consumption to use this car. Me owning the car means you can't own the same car, right? Only I can own that copy of that car and it's excludable, right? Because you have to pay for a car generally unless you're playing Grand Theft Auto or something. So we're gonna have a private good here, right? Private good, excludable and rival. How about WiFi? Well WiFi, right, if I'm connected to a WiFi, it generally doesn't affect your connection to WiFi, right? So in general we're gonna have this non rival situation where we can all connect to the same WiFi connection and it doesn't affect each other, right? So it's gonna be non rival, but it is excludable, right? We set passwords, you have to pay for the Internet service, so it's gonna be excludable here and it's non rival. You have to join the club to get some WiFi. So this is gonna be a club good. Last but not least, we've got fish in the ocean. We've talked about this one right, this is a great example of a common resources, common resource right because we've got it. It's non excludable, right. No one can stop you from going out into the ocean, putting out your rod and catching a fish, but if you catch that fish, I can't catch the same fish. So it's gonna be rival and consumption. Non excludable and rival. That gets us to our common resources and there we go. We've gone through quite a bit of examples there. Hopefully you guys feel a lot more comfortable with the different types of goods, so let's go ahead and move on to the next video.

Struggling with Macroeconomics?

Label the goods as Private Goods (PRI), Common Resources (CR), Club Goods (CG), or Public Goods (PUB).

Watch next

Four Types of Goods and Two Characteristics practice set