Question

Classify each of the following goods as a private good, a public good, a natural monopoly good, or none of the above. A pair of glasses Wifi service Swimming pool A smartphone Public library

Short answer

A pair of glasses: Private good, Wifi service: Natural monopoly good, Swimming pool: Private good, Smartphone: Private good, Public library: Public good.

Step-by-step solution

Define each type of good

To classify each good, first understand the definitions: - Private good: A good that is excludable and rival in consumption. - Public good: A good that is non-excludable and non-rival in consumption. - Natural monopoly good: A good that is excludable but non-rival in consumption, often due to high fixed costs and low marginal costs. - None of the above: A good that does not fit into any of the above categories.

Analyze a pair of glasses

A pair of glasses is excludable because only the owner can use them, and it is rival in consumption because if one person uses them, others cannot. Hence, a pair of glasses is a private good.

Analyze Wifi service

Wifi service can be excludable if it is password protected and non-rival in consumption up to a point, but may become rival if too many users connect. Generally, it can be considered a natural monopoly good due to the initial setup cost and maintenance.

Analyze a swimming pool

A swimming pool can be excludable if access is controlled, and it can be rival in consumption when it becomes crowded. Thus, a swimming pool is a private good.

Analyze a smartphone

A smartphone is excludable because ownership can be restricted to the purchaser, and it is rival in consumption because if one person is using it, another cannot. This makes a smartphone a private good.

Analyze a public library

A public library is generally non-excludable because it is open to everyone and non-rival in consumption, as multiple people can use it at the same time. Hence, a public library is a public good.

Key concepts

private good

A private good is a type of good that is both excludable and rival in consumption. This means that individuals can be prevented from using it, and when one person consumes the good, it reduces the quantity available for others. Examples include items like a pair of glasses or a smartphone. Only the owner of the glasses can use them, and if one person is talking on a smartphone, someone else cannot use that same phone at the same time.

public good

A public good is something that is non-excludable and non-rival in consumption. Non-excludable means you cannot easily prevent people from using it, and non-rival means one person's use does not reduce availability for others. Public libraries often fall into this category. Anyone can use the library, and multiple people can read books there simultaneously without reducing the overall availability of the library's resources.

natural monopoly good

A natural monopoly good is excludable but non-rival in consumption. These goods often arise in industries with large fixed costs and low marginal costs. For example, WiFi service fits this description. It can be password-protected (excludable), making it so only certain users can access it. Initially, it is non-rival because many users can share the service without affecting each other's experience, but it may become rival if too many users connect simultaneously, reducing the service quality.

excludable

Excludability refers to the ability to prevent people from using a good. If access can be restricted to only those who pay or meet certain conditions, the good is considered excludable. For instance, entry to a swimming pool can be controlled by requiring a membership or ticket. Similarly, a smartphone is excludable because it's owned by an individual and not accessible to just anyone without permission.

rival in consumption

Rivalry in consumption means that one person's use of a good reduces the amount available for others. Goods like a pair of glasses or a smartphone are rival in consumption because once one person uses them, others cannot use the same item at the same time. Even a swimming pool can be rival when it becomes crowded, leading to reduced enjoyment for all users. This rivalry affects how these goods are classified and influences how they are treated in economic terms.