When classifying a good as public, private, or semi-private, there are two important characteristics. What are...

When classifying a good as public, private, or semi-private, there are two important characteristics. What are they, and what do they mean?

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Expert Solution

A public good has two key characteristics: it is nonexcludable and nonrivalrous.

Nonexcludable means that preventing anyone from using a good is expensive or impractical to one person.
Nonrivalous means that it doesn't prevent others from using it when one person uses a good.

Examples of the public goods are a number of government services. For example, providing fire and police service would not be easy so some people in a neighborhood would be protected from their property's burning and burglary while others would not be protected at all. Protecting a few automatically requires still protecting many.
Positive externalities and public benefits are terms which are closely related. Public benefits have beneficial externalities, such as support for policing or public health. Nevertheless not all goods and services with favorable externalities are public goods. Education investments ha ve significant positive spillovers but a private corporation can have them.

Private companies can invest in new inventions like the Apple iPad, and make profits that may not capture all of the social benefits.

Rahul Sunny answered 1 year ago

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