What is the difference between privates goods and services and public goods and services?

Answer 1

Goods: All things from which individuals derive satisfaction or happiness

Services: Mental or physical labor or help purchased by consumers. Examples are the assistance of physicians, lawyers, dentists, repair personnel, house cleaners, educators, retailers, and wholesalers; items purchased or used by consumers that do not have physical characteristics.

Private goods and services: Goods that can be consumed by only one individual at a time. Private goods and services are subject to the principle of rival consumption

Public goods and services: Goods for which the principle of rival consumption does not apply; they can be jointly consumed by many individuals simultaneously at no additional cost and with no reduction in quality or quantity.

Principle of rival consumption: The recognition that individuals are rivals in consuming private goods because one person's consumption reduces the amount available for others to consume.

Answer 2

Public sector goods are made for the benefit of people, and are controlled by the government or local authorities. Therefore, the aim is not profit maximisation but to help the public, such as bus services and the BBC.

Private sector goods are made in order to gain profits for the business, and come from businesses owned by private individuals. An example of a private sector good would be a garment from a highstreet store.