Question

1) Give an example of a public good that you consume.             

        → Explain how it is neither excludable nor rival in consumption.

2) Give an example of a club good that you consume.

        → Explain how it is excludable but not rival in consumption.

3) Give an example of a private good that you consume.    

        → Explain how it is both excludable and rival in consumption.

4) Give an example of a common resource that you consume.

        → Explain how it is rival in consumption but not excludable.

Answer 1

Question 1

Public good refers to the good from whose consumption no body can be excluded and whose consumption by one does not reduce quantity to be consumed by others.

Thus, public good have non-excludable and non-rival in consumption nature.

Due to non excludable and non rival nature, private production of public good is generally less than the socially optimum quantity. This compels government to provide the public good.

Example of Public Good - Street Light

Street light is an example of public good.

Once installed, nobody can be refrained from being benefited from such street light.

Secondly, if a person is utilizing the light provided by the street light then this does not reduce the light available to others.

So, street light is a public good and due to this, it is mostly provided by the government.