AP Micro Examples: Distinguishing Private, Public, Club, and Common Goods

📚 Quick Study Guide

• 🏘️ Private Goods: Excludable (sellers can prevent consumption if not paid for) and rivalrous (one person's consumption prevents another's). Example: Pizza.
• 🏛️ Public Goods: Non-excludable (difficult to prevent consumption) and non-rivalrous (one person's consumption doesn't diminish availability for others). Example: National defense.
• 🔑 Club Goods: Excludable but non-rivalrous. Example: Netflix subscription.
• 🏞️ Common Goods: Non-excludable but rivalrous. Example: Fish in the ocean.
• 💸 Excludability: The property of a good whereby a person can be prevented from using it.
• 🤝 Rivalry: The property of a good whereby one person’s use diminishes other people’s use.

Practice Quiz

1. Which of the following is the best example of a private good?
   1. A. A public park
   2. B. A slice of pizza
   3. C. National defense
   4. D. Broadcast television
2. Which characteristic distinguishes a public good from a private good?
   1. A. Excludability
   2. B. Rivalry
   3. C. Profitability
   4. D. Elasticity
3. A crowded beach where anyone can swim represents what type of good?
   1. A. Private good
   2. B. Public good
   3. C. Club good
   4. D. Common resource
4. Netflix, where only subscribers can watch shows, is an example of which type of good?
   1. A. Private good
   2. B. Public good
   3. C. Club good
   4. D. Common resource
5. Why do markets often fail to provide public goods efficiently?
   1. A. Because they are too expensive to produce
   2. B. Because of the free-rider problem
   3. C. Because they are always non-rivalrous
   4. D. Because they are always excludable
6. Overfishing in international waters is a direct consequence of what characteristic of common resources?
   1. A. Excludability
   2. B. Rivalry
   3. C. Non-excludability
   4. D. Both B and C
7. Which of the following goods is non-rivalrous but excludable?
   1. A. A concert in a private venue
   2. B. Clean air
   3. C. A fish in the ocean
   4. D. A public road