a) Free rider problem

a) distinction between public and private goods using the concepts of non-rivalry and non-excludability

b) why public goods may not be provided by the private sector: the free rider problem

non-excludable = when a good/service is difficult to prevent non-payers from consuming

non-rivalrous = when one person’s consumption of a good does not prevent another person’s consumption

public good = a non-excludable and non-rivalrous good

private good = an excludable and rivalrous good

private goods can produce profit for firms

they are excludable, so consumers must pay to consume
they are rivalrous, so consumers are incentivised to consume to access the limited supply

public goods do not produce profit for firms because of the free rider problem