Which feature characterizes a public good?

Which feature characterizes a public good?

• A. Non-excludable and rival.
• B. Excludable and non-rival.
• C. Non-excludable and non-rival.
• D. Excludable and rival.

Answer: (C)

Public goods are defined by two features: non-excludability and non-rivalry. Non-excludable means you can’t realistically prevent people from using the good, so access is open to all. Non-rival means one person’s use doesn’t reduce another’s ability to use it, so many can use it at the same time without diminishing value. Because of these properties, markets typically undersupply such goods, since people may rely on others to pay (the free-rider problem), making government provision or collective funding common. An example is national defense or a lighthouse—everyone benefits, and one person’s benefit doesn’t lessen another’s. Goods that are non-excludable but rival (like fish in an open sea) become overused and are not public goods. Goods that are excludable and non-rival (like a studio film broadcast to paying subscribers) are club goods, and those that are excludable and rival are private goods.

Public goods are defined by two features: non-excludability and non-rivalry. Non-excludable means you can’t realistically prevent people from using the good, so access is open to all. Non-rival means one person’s use doesn’t reduce another’s ability to use it, so many can use it at the same time without diminishing value. Because of these properties, markets typically undersupply such goods, since people may rely on others to pay (the free-rider problem), making government provision or collective funding common.

An example is national defense or a lighthouse—everyone benefits, and one person’s benefit doesn’t lessen another’s. Goods that are non-excludable but rival (like fish in an open sea) become overused and are not public goods. Goods that are excludable and non-rival (like a studio film broadcast to paying subscribers) are club goods, and those that are excludable and rival are private goods.