Read the following statements carefully and choose the correct alternative from the following:
Statement 1 – Public goods are those goods and services that are collectively consumed by the public.
Statement 2 – Public goods are excludable and rivalrous in nature.
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
Statement 1 – Public goods are those goods and services that are collectively consumed by the public.
Statement 2 – Public goods are excludable and rivalrous in nature.
Alternatives:
a) Both the statements are true.
b) Both the statements are false.
c) Statement 1 is true and Statement 2 is false
d) Statement 2 is true and Statement 1 is false
Answers & Comments
Explanation:
The correct alternative is:
c) Statement 1 is true and Statement 2 is false
Statement 1 is true - Public goods are goods and services that are collectively consumed by the public.
Statement 2 is false - Public goods are non-excludable, meaning that individuals cannot be excluded from consuming them, and they are often non-rivalrous, meaning that one person's consumption does not reduce the availability for others.
Verified answer
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The correct alternative is:
d) Statement 1 is true and Statement 2 is false
Public goods are characterized by being non-excludable (meaning it's difficult to exclude individuals from using them) and non-rivalrous (meaning one person's use of the good doesn't reduce its availability to others).