Which of the following statement is correct regarding Public Goods?
Generally, the benefits of public goods are available to all.
Public goods are commodities or services that a society makes available to all its members, and they are generally financed collectively by the government out of tax revenue rather than sold for a price.
They have two defining features: non-rivalry, meaning one person's use does not reduce the quantity available to others, and non-excludability, meaning it is not feasible to stop any individual from benefiting from them.
Because of non-excludability, people can enjoy the good without paying for it, giving rise to the free-rider problem, so the market mechanism and ordinary transactions between individual consumers and producers cannot supply such goods efficiently, this rules out those two options.
Clothes, on the other hand, are a classic private good: they are both rival (if one person wears a garment, another cannot) and excludable (a seller can withhold them until paid), so calling clothing a public good is incorrect.
Standard examples of true public goods include national defence, street lighting, public roads and lighthouses, whose services flow to everyone regardless of individual payment.
It follows that the only correct statement is that the benefits of public goods are generally available to all, since none can be excluded from enjoying them.
Hence, the correct statement is that generally, the benefits of public goods are available to all.
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Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
A market, in which there are a large number of firms, homogeneous product, infinite elasticity of demand for an individual firm and no control over price by firms, is termed as________.
If the two goods are substituted, then the indifference curve will be:
The government multiplier is given by (where c = MPC and t = tax rate)
