Topic Six (1.6): Classification of Goods and Services

Introduction Icon.png Introduction

In this topic you will learn to explain the different types of goods, such as free goods and private goods. You will further explore the meaning and importance of public goods and the importance of merit and demerit goods. As an introduction to government intervention, you will also analyse how the underconsumption of merit goods and the overconsumption of demerit goods comes about from imperfect information.

Skills Icon.png Task

Economics in Context

  • Read the article on page 41 of the textbook and consider how fire and rescue services are provided and paid for in your country.
  • Further guidance and model answers can be found in the digital textbook and in General Resources.

Watch Icon.png Watch

Now watch these videos, which explain the ideas of public goods and the concept of merit and demerit goods which are over- or under-consumed due to information failure, and make notes:

WATCH – Public Goods (YouTube) Links to an external site.

WATCH – Merit and De-merit Goods – Information Failure (YouTube) Links to an external site.

Read & Make Notes Icon.png Read and Make Notes

Read and supplement your notes from the following sections of the textbook on pages 41 to 46:

    • 1 Excludability and rivalry;
    • 2 Private good;
    • 3 Public goods;
    • 4 Merit goods, demerit goods and information failure.

Glossary Icon.png Glossary

Highlight any new terminology on your glossary.

Skills Icon.png Task

Think Like an Economist

  • Read and complete the ‘Think like an Economist’ task on page 46 of the textbook.
  • Suggested answers can be found in the digital textbook and in General Resources.

Consolidate Icon.png Consolidate

  • Please find some extra revision material below which highlights some key points from this module:

READ – The Economic Problem Download READ – The Economic Problem

  • Now try the exam-style questions on pages 46 of the textbook.
  • Suggested answers can be found in the digital textbook and in General Resources.

Reflect Icon.png Reflect

  • Draw up a table like the one on page 48 of the textbook and complete the self-evaluation.
  • If there are any areas about which you are unsure, please go back over your notes, the textbook and the resources listed in this topic before moving on.

Consolidate Icon.png Consolidate

  • You have now completed Unit 1: Scarcity, Choice and Opportunity Cost in the textbook. Please set some time aside to have a go at the end-of-unit questions on pages 49 to 50.
  • Suggested answers can be found in the digital textbook and in General Resources.

Quiz Understand Icon.png Quiz

Now that you have completed all the topics, it is time to check your understanding by taking the multiple-choice quiz. You can take this quiz as many times as you like. Use it as an opportunity to test yourself!

Worksheet Icon.png Assignment

When you have completed all the activities and are fully prepared and feel confident with the material, you should complete Assignment One and submit it to your tutor via Canvas for marking and feedback.