a) the consumption of a public good by one person prevents its consumption by another person.
b) public goods tend to have very few benefits.
c) public goods always have external costs (negative externalities).
d) joint consumption allows those who do not pay for the good to still benefit from the good.
The Correct Answer and Explanation is:
The correct answer is:
d) Joint consumption allows those who do not pay for the good to still benefit from the good.
Explanation:
Public goods are a special category of goods in economics characterized by two main features: non-excludability and non-rivalry.
- Non-excludability means that it is difficult or impossible to prevent someone from using the good once it is provided.
- Non-rivalry means that one person’s use of the good does not reduce the availability of the good for others.
Because of these features, public goods are subject to “joint consumption,” which means they can be consumed by multiple people at the same time without diminishing their value or availability to others. A classic example is national defense. When a country provides defense, it protects all citizens equally, regardless of how much each person contributes in taxes. Similarly, clean air, public fireworks displays, and street lighting are also public goods that everyone benefits from—even those who don’t pay for them.
This leads to what economists call the free rider problem. Since people cannot be excluded from using the good even if they don’t pay for it, many individuals might avoid contributing to its provision, expecting others to cover the cost while they still benefit. This is what option (d) is referring to—joint consumption allows those who do not pay for the good to still benefit from the good.
Now let’s consider why the other options are incorrect:
- (a) is false because it describes rival goods. In contrast, public goods are non-rival.
- (b) is incorrect because public goods often have significant benefits—like clean water, air, or public safety.
- (c) is also false. Public goods do not always create negative externalities. In fact, many public goods generate positive externalities, such as improved public health or secu.