Microeconomics Essay Example | Topics and Well Written Essays - 250 words

Microeconomics - Essay Example 2. Explain the difference between a private good and a public good. Why has there been an increase in the number of public goods "produced" by governments? Public Goods are goods that are non-rival and non-excludable, quite the opposite of Private Goods (Experimental Economics Center). Public goods, being non-rival, means that the marginal utility used-up by one consumer does not limit the marginal utility that another consumer will use. Private goods, on the other hand, are rival goods, which mean that if there are a total of 10 pencils in the market and Consumer A utilizes 4 of those pencils, then the marginal utility enjoyed by Consumer B is decreased to only 6 pencils. Public goods are non-excludable; which basically means that one consumer does not block other consumers from using up the public good. This differs from private goods in that should consumers use up the supply of private goods, other consumers are excluded from enjoying the private good. In Economics, one of the ca uses of Market Failure is public good and the tendency of the consumers to free-ride.