Unlike a private good, a public good has benefits available to all, including nonpayers.
The correct answer and explanation is:
The statement is True. A public good is characterized by its non-excludability and non-rivalrous nature, meaning that individuals cannot be excluded from using the good, and one person’s consumption of the good does not reduce its availability for others. This is in contrast to a private good, which is both excludable (only those who pay can access it) and rivalrous (one person’s consumption reduces the availability of the good for others).
The key distinction between public and private goods lies in their ability to provide benefits to all individuals, regardless of whether they pay for them. Public goods are available to everyone, and individuals who do not contribute to their provision can still enjoy the benefits, leading to what is called the “free rider” problem. This means that people can benefit from public goods without having to pay for them, which can lead to underproduction of these goods if left solely to private market forces.
Examples of public goods include clean air, national defense, and public parks. These goods are essential for societal welfare, but because they are non-excludable, it is challenging to charge individuals for their use. As a result, governments often provide these goods or regulate their provision to ensure that society as a whole benefits.
On the other hand, private goods like food, clothing, and electronics are excludable and rivalrous. Only those who pay for these goods can consume them, and one person’s use prevents others from consuming the same unit of the good.
In summary, the distinction between public and private goods lies in their availability and consumption patterns. Public goods are accessible to all, including nonpayers, while private goods are restricted to those who pay for them.