Assessment one: ECS3704

Student number: 63291649

Collective goods and services are usually those products that do not have a market price, because it is
impossible to exclude any consumer from the market, although some individuals pay for these goods
and services, most would not pay as they cannot be withheld from them anyway.. these goods can be
regarded as Public goods. while the consumption of public goods cannot be withheld from anyone,
private goods provide the consumer with excludability, making the consumption of a private good
restricted to particular persons, especially those who pay the indicated or negotiated price. once a
private good is paid for, ownership is certain and uniquely determined.

A comparison of key characteristics of public and private goods is as follows:

Public goods Private goods

property rights Non excludable Excludable
Consumption Non-rival Rival
Aggregate demand curve Vertical addition of individual Horizontal addition of
demand curves individual demand curves
Partial equilibrium condition The sum off marginal utilities Marginal utility of each
for optimum provision equal marginal cost. consumer equals marginal cost
with the individual consumer
Efficient pricing rule The sum of individual prices Price equals marginal cost
equals marginal cost
Higher education is regarded as a mixed good or quasi public goods because most universities obtain
revenue from the government and the subsidies but also charge students registration and tuition fees.
this split can be viewed as an attempt to share the cost of university education in accordance with its
public and private good components.

Quasi goods are private goods that are provided by the government because they involve extensive
benefits to the general public. Three reasons why quasi public goods exist:

 They are too expensive to obtain payment for goods

 Competition is inefficient or wasteful
 it benefits not only those who use the good but society as a whole

There is a thin line between private and public goods as they are closely related and can be mistaken
for one another.

References

An introduction to economics: A South African perspective Editor: FG Steyn Year:2004 Page: 54(5.6.1(b))

Calitz,E.Steenekamp.T&S Siebrits,K., 2019. Public Economics. 7 th edition. Cape Town: Oxford University
Press: page 55

Calitz,E.Steenekamp.T&S Siebrits,K., 2019. Public Economics. 7 th edition. Cape Town: Oxford University
Press: page 59. Source : Adapted from Freeman.A.M.1983. Intermediate micro-Economic analysis. New
York; Harper, page 482.
Calitz,E.Steenekamp.T&S Siebrits,K., 2019. Public Economics. 7 th edition. Cape Town: Oxford University
Press: page 62

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