Differentiating Between Market Structures

Submitted by: Submitted by

Views: 1207

Words: 1672

Pages: 7

Category: Business and Industry

Date Submitted: 10/17/2010 06:01 AM

Report This Essay

Running head: Differentiating Between Market Structures

Differentiating Between Market Structures

Learning Team E

Warren Cohen

John Fraughton

Brenda Greenwell

Maria Montoya

University of Phoenix

ECO 212

Oct 14, 2009

Private Goods Vs. Common Goods And Natural Monopolies Vs. Common Resources

Categorizing goods as either public or private requires deciding if they have certain defining factors. Deciding if the good is exclusive, meaning that it’s reasonably possible to prevent certain consumers from enjoying the good, is the first factor. Determining if the good is a rival good is the second factor. A rival good is a good that is no longer available to other consumers once it has been enjoyed by one consumer. Private goods are both exclusive and rival. Public goods are neither exclusive nor rival.

An example of a private good is the Victoria’s Filet that John Fraughton ordered at Outback Steakhouse last night. It is an exclusive good because he had to pay $21.95 for it. The fact that there’s a monetary cost to a good can exclude certain people from enjoying it. It is also a rival good because after John consumed the filet there was no way that anyone else would be able to consume it. An example of a public good is the traffic light at the intersection of Tutt Boulevard and Barnes Road. While on his way home from Outback, John had to stop at that light, which was red. Every driver at that location is able to benefit from that traffic signal, and it’s impossible to prevent anyone from realizing that benefit. That defines the traffic light as non-exclusive. Once John had passed through the intersection, the traffic light was still hanging from its wire. Other drivers were still able to benefit from the light after John had,...