Private Good

  

Categories: Incorporation

See: Public Good.

Throw your ideas of privacy out your window. But not your clothes. You can keep those on.

Private goods are goods that are bought and consumed, and when they’re consumed, it prevents someone else from consuming it. When you buy popcorn and Sour Patch Kids at the movies, these are private goods. You’re buying them, and you consume them, which prevents others from consuming them. Sharing with your friend still makes it a private good, since the good is “excludable.”

What’s a good that’s non-excludable? A fireworks show. Some people pay to see the fireworks show, and get let into the little gated area with the best seating. Yet others can stand in the right places outside of the paid, gated area, and still “consume” the good, for free. Yep, free riders. Where there are free riders there are non-excludable goods.

Those who did pay aren’t having a lesser fireworks show because of the free riders. That means it’s also non-rivalrous, since many people can enjoy a fireworks show.

Some rando at the movies couldn’t consume your popcorn without directly taking it from you though, unlike the fireworks show. Popcorn is a rivalrous good; only one person can have each piece of popcorn.

When there are limits to who can consume something, it’s rivalrous. When others are excluded from consumption because you bought it, it’s excludable. Excludable and rivalrous = private good. Clothes, parking spaces, and food are all private goods: you have to buy them, and only so many people get use out of them at a time.

Private goods contrast with public goods, which are non-excludable (free), and non-rivalrous (consuming by one doesn’t lessen consumption by another). Like public parks.

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Econ: What are Government Purchases of G...1 Views

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And finance Allah Shmoop What Our government purchases of goods

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and services Okay people The U S Economy is big

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big I tell you Big eighteen trillion dollars big and

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told a lot of Big Macs Dizzy Plus she's from

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Amazon and Netflix subscription Yeah it's all counted in there

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Well who's buying all that stuff All of us of

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course but the biggest single customer Well you can probably

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guess where we're going with this one from the title

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of the video but we'll get back to that in

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a second The first couple of basic So you know

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what we're talking about The U S economy is measured

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in GDP an acronym that stands for gross domestic product

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You have you ever seen a baby being born That's

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pretty gross domestic product but well that's not what we're

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talking about here The GDP We're talking about measures all

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the stuff produced in a country All the products made

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and all the services rendered its the grand accounting of

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what every American does at work every day and like

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an example of a service is rendered would be like

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an accountant sending you a bill for four hours of

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doing your taxes like that's a service But who's buying

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all that stuff we make Well on the other end

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of the GDP number is all a bunch of people

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paying money for all those Big Macs and Disney Plus

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she's and subscriptions to Netflix All right now back to

01:14

the original question Who is the biggest single customer for

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all this stuff No not your hoarder Aunt Millie It's

01:21

the federal government Uh all right Now collectively the biggest

01:25

customer is well all of us each one of us

01:27

buying Starbucks frappes on the way home from work and

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ordering Captain America T shirts at three a M And

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Gas and Millie subscribing to forty five different magazines that

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she actually has physically delivered to her house on dead

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trees That's called consumer spending It makes up the biggest

01:42

part of the U S GDP and collectively consumer spending

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makes up About two thirds of the economy specifically represents

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about twelve point eight trillion dollars of the eighteen point

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six trillion dollars total of GDP in two thousand eighteen

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here But none of us individually make a big dent

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on our own It takes a village to buy all

02:01

that stuff The other third of the economy is split

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pretty evenly between government and business spending In fact government

02:08

has the slight edge there representing three point three trillion

02:11

dollars worth of GDP purchases By comparison businesses ill spent

02:15

just under three point one trillion ish last year So

02:18

governments in general fueled about a sixth of total purchases

02:22

in the economy that counts all levels of government federal

02:25

state and local So that's government spending on goods and

02:28

services It's an economic stat that tracks the government contribution

02:32

to gross domestic product Think of GDP is a simple

02:35

equation It consists of consumer spending plus business spending plus

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government spending plus net exports right net exports representing the

02:44

amount of U S goods and services bought by people

02:46

overseas Minus the foreign stuff you know we buy from

02:49

them That's what net Well there are some things keep

02:52

in mind about government spending we're talking about here There

02:54

are a few big chunks of government budgets that don't

02:57

really fit into the equation For instance this kind of

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government spending doesn't count interest payments on the debt Those

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debt service payments equate to about six percent of the

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federal budget huge number It also doesn't count what's called

03:09

transfer payments well This category includes things like Social Security

03:13

payments where the government just sent someone to check You

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know money is simply transferred from the government's bank account

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then to someone else's Well the figure is only looking

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in situations where the government directly buys a good or

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a service meaning the government's contribution to G P Right

03:27

now Well it's a figure included Social Security payments Well

03:31

then the amount would get counted twice right once when

03:34

the government sent the money and a second time when

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the person went out and you know about food with

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it Well to avoid that double counting transfer payments are

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left out of the figure Okay quick review People care

03:44

about government purchases of goods and services because well it's

03:46

a major contributor to GDP which measures overall economic production

03:51

It includes all the government purchases of all levels However

03:54

the stats also include a breakdown of federal spending versus

03:57

spending it state and local levels Not everything in government

04:00

budget you are included The stats don't include debt service

04:04

They also don't include what's called transfer payments you know

04:07

things like Social Security and other similar welfare payments While

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consumer spending makes up the biggest chunk of GDP with

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the two third share the federal government makes up the

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biggest single purchaser Yeah even if Aunt Millie gives it 00:04:20.922 --> [endTime] a run for the money

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