Question 19
Public FinanceA public good is characterised by:
I. Non-rivalry in consumption
II. Non-excludability
III. The free rider problem
IV. Being produced only by the private sector
- A.I, II and III only
- B.II and IV only
- C.I and III only
- D.All of the above
Show the answer and explanation
Answer: A (I, II and III only)
Explanation
Public goods are non-rival and non-excludable, which creates free riders. The private sector under-provides them, so government usually does.