Example of A Private Good
An example of the private good is bread: bread eaten by a given person cannot be consumed by another (rivalry), and it is easy for a baker to refuse to trade a loaf (exclusive).
To illustrate the horizontal summation characteristic, assume there are only 2 people in this economy and that:
- Person A will purchase: 0 loafs of bread at $4, 1 loaf of bread at $3, 2 loafs of bread at $2, and 3 loafs of bread at $1
- Person B will purchase: 0 loafs of bread at $6, 1 loafs of bread at $5, 2 loafs of bread at $4, 3 loafs of bread at $3, 4 loafs of bread at $2, and 5 loafs of bread at $1
As a result, a new market demand curve can be derived with the following results:
| Price per Loaf of Bread | Loaf of Bread | ||
|---|---|---|---|
| Person A | Person B | Total | |
| $6 | 0 | 0 | 0 |
| $5 | 0 | 1 | 1 |
| $4 | 0 | 2 | 2 |
| $3 | 1 | 3 | 4 |
| $2 | 2 | 4 | 6 |
| $1 | 3 | 5 | 8 |
|
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Private good can also defined as an exclusive production of goods.
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Famous quotes containing the word private:
“A private should preserve a respectful attitude toward his superiors, and should seldom or never proceed so far as to offer suggestions to his general in the field. If the battle is not being conducted to suit him, it is better for him to resign. By the etiquette of war, it is permitted to none below the rank of newspaper correspondent to dictate to the general in the field.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)