PS139D

private good

A product that must be purchased in order to be consumed, and whose consumption by one individual prevents another individual from consuming it. Economists refer to private goods as "rivalrous" and "excludable". If there is competition between individuals to obtain the good and if consuming the good prevents someone else from consuming it, a good is considered a private good. A private good is the opposite of a public good. Examples of private goods include food, airplane rides and cell phones.

common pool resource

A resource that benefits a group of people, but which provides diminished benefits to everyone if each individual pursues his or her own self interest. The value of a common-pool resource can be reduced through overuse because the supply of the resource is not unlimited, and using more than can be replenished can result in scarcity. Overuse of a common pool resource can lead to the tragedy of the commons problem. Common-pool resources, such as forests, are often managed by a combination of governments and markets. This can be done by only allowing a certain amount of the resource to be over a period of time, allowing for a core section of the resource to remain intact.

club good

Club goods, a subtype of public goods, are excludable but non-rivalrous, at least until they reach a point where congestion occurs. These goods are often provided by a natural monopoly. Club goods have artificial scarcity. Examples of club goods include private golf courses, cinemas, toll roads. A non-congested toll road is an example of a club good. It is possible to exclude someone from using it by simply denying them access but it is not a rival good since one person's use of the road does not reduce its usefulness to others.

public good

In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others. Examples of public goods include fresh air, knowledge, lighthouses, national defense, flood control systems and street lighting. Public goods that are available everywhere are sometimes referred to as global public goods.

low level equilibrium

a concept in economics that states that at low levels of per capita income people are too poor to save and invest much, and this low level of investment results in low rate of growth in national income. As per capita income rises above a certain minimum level at which there is zero saving, a rising proportion of income will be saved and invested and this will lead to higher rate of growth in income.