BASIC CONCEPTS – GOODS – VI

VI)  On the basis of ownership

Private goods and Public goods.

Private goods

  • Goods which are privately owned and consumed by people.
  • Private goods satisfy private wants through voluntary exchange.
  • Private goods have to be paid for.
  • Private goods are provided to those who are willing to pay for them.
  • Principle of exclusion is applied in case of private goods.
  • Production of private goods is profit motivated.
  • Benefits from the sale of private goods can be monopolised.
  • Private goods refer to individual property eg building, land, vehicle etc which are possessed by an individual.

 

Public goods

  • Goods which are collectively owned and consumed people.
  • Public goods satisfy social wants according to the need and convenience of consumers.
  • Public goods may be low priced or free.
  • Provided to all to satisfy wants which may not be satisfied by private goods.
  • Principle of exclusion is not applied in case of public goods
  • Price fixation of private goods is possible
  • Cost [not price] fixation of public is possible
  • Production of public goods is welfare motivated.
  • Benefits from the sale of public goods is shared by all.
  • Public goods like railways roads dams defence goods etc are owned by society. They are common to all and owned by society collectively.
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