Public Goods, Private Goods, Common Resources, and Essay

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public goods, private goods, common resources, and natural monopolies.

Public goods are when there is a focus on providing benefits to someone without them having to offer different forms of compensation. This is because the interests of the community will outweigh the need for making any kind of profit. Some examples of this include: fire, police, and national defense. Private goods are those products that are sold directly to consumers with the intention of making a profit. This is when a private producer, will realize that there is unmet demand and provide this to consumers. In exchange for delivering these services or products, they will receive some form of compensation. (Mankiw, 2011)

Common resources are those reserves that are available to everyone. The most notable include: the fish in the ocean, the air that everybody is breathing and public lands. While natural monopolies are when there is one organization which can effectively address needs of the public. Some examples of this include: toll roads, water / sewage service and police / fire protection. These are important, because they play a role that is serving the interests of communities and the general public. (Mankiw, 2011)

The differences between each of these areas are based upon, if the product or service is used by everyone. This means that when something is not in the interests of the general public or it is serving select groups. There will be a fee charged for them (i.e. private goods). While in situations where the public has a stake, there will be no money associated with the using a particular resource or service (i.e. public goods and common resources). In some cases, there is a single entity that has the control of meeting these objectives (i.e. A natural monopoly). These distinctions will vary depending upon the interest of the general public.

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In those situations where there is no conflict, is the point that a private goods transaction will occur. (Mankiw, 2011)

Explain how labor market equilibrium is affected by the supply and demand of labor.

The labor market is directly impacted by supply and demand. The way that this occurs is employers will hire new employees when they feel confident about the future and are expanding their business. This means that they need to see an increase in sales. When this happens, they will enlarge the size of their firm and the number of staff members.

(Mankiw, 2011)

However, during times of declining profit margins and sales is when they will decrease their employees. This is because they do not know about the future and need to adjust with demand from their customers. It is at this point that they will layoff staff, in an effort to adjust with these declines. (Mankiw, 2011)

The way that these two factors are affecting labor market equilibrium is to create changes in the overall unemployment rate. This occurs, based on transformations that are taking place in the economy (which will lead to periods of increased hiring and layoffs). As different firms make these adjustments, is when they will have a dramatic impact on labor market equilibrium. This will increase or decrease the total amounts of available workers (who are seeking employment). (Mankiw, 2011)

For example, during periods when the economy is slow, firms will layoff more employees. This will affect labor market equilibrium by increasing the supply of available workers in the economy (leading to a rise in unemployment). It is at this point that employers can become more stringent on who they are hiring from the increased supply. (Mankiw, 2011)

While during times, when the economy is strong, there will be demand for.....

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