Problem 13 What are the two key characteris... [FREE SOLUTION]

Chapter 13: Problem 13

What are the two key characteristics of public goods?

Short Answer

Expert verified

The two key characteristics of public goods are non-excludability and non-rivalry. Non-excludability means that once the good is provided, no one can be excluded from enjoying its benefits, while non-rivalry means one person's consumption of the good does not reduce the availability for others to consume. These characteristics distinguish public goods from private goods, which are typically rival and excludable.

Step by step solution

Define Public Goods

Public goods are goods that are made available to all individuals within a society, regardless of whether or not they contribute to the production or financing of the good. These goods are typically provided by the government, as it would be difficult for private firms to profitably produce them.

Explain the First Key Characteristic: Non-excludability

The first key characteristic of public goods is non-excludability. Non-excludability means that once the good is provided, no one can be excluded from enjoying its benefits, whether they contributed to the production of the good or not. This is because there is no feasible way to prevent someone from enjoying the benefits of a public good. For example, once a public park is built, everyone can enjoy it, even if they didn't pay for its construction.

Explain the Second Key Characteristic: Non-rivalry

The second key characteristic of public goods is non-rivalry. Non-rivalry means that one person's consumption of the good does not reduce the availability of the good for others to consume. In other words, the good can be consumed by multiple individuals without any additional cost. For example, when someone listens to a public radio broadcast, it does not reduce the availability of the broadcast for others to enjoy. In summary, the two key characteristics that define public goods are non-excludability and non-rivalry. These characteristics are what make public goods unique and distinguish them from private goods, which are typically rival and excludable.