Standard Address
 12.1 Students understand common terms
& concepts and economics reasoning.
3.3 - Objectives
 Describe and provide examples of four
types of goods.
 Define negative externalities and
positive externalities, and discuss why
government intervenes in such markets.
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Standard Addressed:
 12.1 Students understand common
terms & concepts and economics
reasoning.
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CONTEMPORARY ECONOMICS: LESSON 3.3
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LESSON 3.3
Key Terms
Public Goods
and Externalities
 private goods
 public goods
 quasi-public goods
 open-access goods
 negative externalities
 positive externalities
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Private Goods
Private goods—Rival
& Exclusive
goods with two
features
1. the amount
consumed by one
person is unavailable
to others
2. nonpayers can easily
be excluded
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Public Goods
Public goods—
goods that,
once produced,
are available to
all, but
nonpayers are
not easily
excluded.
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Public Goods
Both nonrival
and
nonexclusive.
Available for all
to consume,
regardless of
who pays and
who doesn’t.
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Quasi-public
Goods
Goods that are
nonrival but
exclusive are
called quasipublic goods –
for example
radio, television,
YouTube.
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Open-access Goods
Goods that are rival but
nonexclusive are called
open-access goods –
like fishing in the
ocean.
By imposing restrictions
on open-access resource
use, governments try to
keep renewable resources
from becoming depleted.
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CONTEMPORARY ECONOMICS: LESSON 3.3
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Checkpoint: pg.77
Name the four categories of goods, and
provide an example of each.
 Private goods are those that are rival in
consumption, such as _____.
 Public goods are nonrival in consumption,
such as _____.
 Quasi-public goods are nonrival but
exclusive, such as _____.
 Open-access goods, are rival but not
nonexclusive, such as ____.
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Negative Externalities
Negative
externalities
generally are byproducts of
production or
consumption that
impose costs on
third parties.
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Brazilian hardwood floors
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Correcting for
Negative Externalities
Government
restrictions
can improve
the allocation
of openaccess
resources.
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Correcting for
Negative Externalities
Government
restrictions.
Antipollution
laws
Water quality
restrictions
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Correcting for
Negative Externalities
Government
restrictions.
Noise
restrictions
Local
zoning laws
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Positive Externalities
Positive
externalities occur
when the by-products
of consumption or
production benefit
third parties.
Education generates
positive externalities.
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Checkpoint: pg.80
What are negative externalities and
positive externalities, and why does
government intervene to regulate them?
Negative externalities are by-products of
consumption that impose a cost on third parties.
Positive externalities occur when the by-product
of consumption benefit third parties.
Governments intervene to protect these third
parties who are indirectly involved.
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CONTEMPORARY ECONOMICS: LESSON 3.3
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Key Concepts
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Assessment
CONTEMPORARY ECONOMICS: LESSON 3.1
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