Answer to Question #213947 in Economics for Precilla

Question

Differentiate between private goods and public goods and then illustrate and discuss why in the 

provision of private good the summation is horizontal while it is vertical in the case of the provision 

of public good (50)

Answer 1

Public goods are the ones which are provided by the nature or the government for free use by the public. Private goods are the ones which are manufactured and sold by the private companies to satisfy the consumer needs and wants.

We sum private goods horizontally, because consumers cannot consume the same units.

Public goods are non-rivalrous, so everyone can consume each unit of a public good. The economy's marginal benefit curve (demand curve) for a public good is thus the vertical sum all individual's marginal benefit curves.