Question

1. For each of the following, determine whether the item is a private good, impure public good or a pure public good. Explain your response based on the item’s characteristics. [2]

   1. Wilderness areas

   2. Medical school education

   3. Public television programs

   4. Automated teller machines (ATM)

Answer 1

The property of the pure public goods is that it is non-rivalrous and non-excludable. So, we'll check if the goods or services satisfy this property or not.

a) Wilderness area is impure public good as it is non excludable since the wilderness area is not owned or maintained by any private or public authority that can exclude some people from entering and allow other people. But as many starts visiting this wilderness area the ability of others to enjoy the environment gets compromised as a result it is rivalrous in nature good as it gets congested.

b) Medical school education is private good since it is both rivalrous and excludable in nature. It is rivalrous because there are limited seats in any medical school, so not everyone can get the medical education. And it is excludable since people need to pay fees for medical education and those who can't afford to pay can be excluded from this by the school.

c) Public television programme is an example of pure public good as it satisfies both the property of pure public good of being non-rivalrous and non-excludable. Anyone who is willing to watch public programme can't be excluded because it's a public programme and does not require any charges. And one's ability to watch is not compromised by the number of people already watching it. Hence, it is a pure public good.

d) Automated teller machines (ATM) is an example of private good since it is both rivalrous and excludable in nature. It is excludable because only those who possess ATM card can use ATMs and having an ATM card is decided by bank which can exclude some people on the bases of financial status. And it is rivalrous because the one's ability to use ATM is compromised when many are already using it.