UPSC Exam > UPSC Questions > Consider the following statements: Public g...
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Consider the following statements:
Public goods can be provided through a market mechanism.
The consumption of public goods by several individuals prevents some individuals from using it.
An individual who does not pay for a public good cannot be excluded from enjoying its benefits.
Which of the statements given above is/are Correct?
- a)3 only
- b)1 and 2 only
- c)1 only
- d)1 and 3 only
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements: Public goods can be provided thro...
Explanation:
Public goods are goods that are non-excludable and non-rivalrous in nature. This means that once provided, they are available for everyone to use and their consumption by one individual does not prevent others from using them.
Statement 1: Public goods can be provided through a market mechanism.
This statement is incorrect. Public goods are typically not provided through a market mechanism because of their non-excludable nature. In a market, goods are typically exchanged for a price and individuals who do not pay for a good can be excluded from using it. However, in the case of public goods, individuals cannot be excluded from using them, regardless of whether they have paid for them or not. This is because public goods are available for everyone to use once they are provided. Therefore, public goods are often provided by the government or through collective action rather than through a market mechanism.
Statement 2: The consumption of public goods by several individuals prevents some individuals from using it.
This statement is incorrect. Public goods are non-rivalrous in nature, which means that their consumption by one individual does not prevent others from using them. For example, a public park can be used by multiple individuals simultaneously without any decrease in its availability. This is in contrast to private goods, which are rivalrous in nature and their consumption by one individual reduces their availability for others. Therefore, the consumption of public goods by several individuals does not prevent others from using them.
Statement 3: An individual who does not pay for a public good cannot be excluded from enjoying its benefits.
This statement is correct. One of the key characteristics of public goods is their non-excludability. This means that individuals cannot be excluded from using a public good, regardless of whether they have paid for it or not. For example, individuals who have not paid taxes can still benefit from public goods and services provided by the government, such as roads or public schools. This is because these goods are available for everyone to use once they are provided.
Conclusion:
Therefore, the correct answer is option A, as only statement 3 is correct. Public goods cannot be provided through a market mechanism and their consumption by several individuals does not prevent others from using them. However, individuals who do not pay for public goods cannot be excluded from enjoying their benefits due to their non-excludable nature.
Public goods are goods that are non-excludable and non-rivalrous in nature. This means that once provided, they are available for everyone to use and their consumption by one individual does not prevent others from using them.
Statement 1: Public goods can be provided through a market mechanism.
This statement is incorrect. Public goods are typically not provided through a market mechanism because of their non-excludable nature. In a market, goods are typically exchanged for a price and individuals who do not pay for a good can be excluded from using it. However, in the case of public goods, individuals cannot be excluded from using them, regardless of whether they have paid for them or not. This is because public goods are available for everyone to use once they are provided. Therefore, public goods are often provided by the government or through collective action rather than through a market mechanism.
Statement 2: The consumption of public goods by several individuals prevents some individuals from using it.
This statement is incorrect. Public goods are non-rivalrous in nature, which means that their consumption by one individual does not prevent others from using them. For example, a public park can be used by multiple individuals simultaneously without any decrease in its availability. This is in contrast to private goods, which are rivalrous in nature and their consumption by one individual reduces their availability for others. Therefore, the consumption of public goods by several individuals does not prevent others from using them.
Statement 3: An individual who does not pay for a public good cannot be excluded from enjoying its benefits.
This statement is correct. One of the key characteristics of public goods is their non-excludability. This means that individuals cannot be excluded from using a public good, regardless of whether they have paid for it or not. For example, individuals who have not paid taxes can still benefit from public goods and services provided by the government, such as roads or public schools. This is because these goods are available for everyone to use once they are provided.
Conclusion:
Therefore, the correct answer is option A, as only statement 3 is correct. Public goods cannot be provided through a market mechanism and their consumption by several individuals does not prevent others from using them. However, individuals who do not pay for public goods cannot be excluded from enjoying their benefits due to their non-excludable nature.
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Consider the following statements: Public goods can be provided thro...
Option (a) is the correct answer.
- Statement 1 is incorrect: Public goods are distinct from private goods as they cannot be provided through the market mechanism and thus must be provided by the government. This is known as the “allocation function” of the government.
- Statement 2 is incorrect: Public goods such as roads, public parks, highways, railways are for the benefit of all. The consumption of such goods by several individuals is not “rivalrous” in the sense that a person can enjoy the benefits without reducing their availability to others.
- Statement 3 is correct: In case of private goods if one does not pay then one can be excluded from enjoying its benefits. However, in case of public goods there is no feasible way of excluding anyone from enjoying its benefits. Thus, non-payers cannot be excluded. Since public goods are “non-rivalrous” and “non-excludable” it becomes difficult to collect fees for the public goods. This leads to the problem of “Free-riders”. Since consumers will not voluntarily pay for what they are getting for free it breaks the link between producers and consumers and therefore the government must step in to provide for such gods. This is known as “Public provisioning”.
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Consider the following statements: Public goods can be provided through a market mechanism. The consumption of public goods by several individuals prevents some individuals from using it. An individual who does not pay for a public good cannot be excluded from enjoying its benefits. Which of the statements given above is/are Correct?a)3 onlyb)1 and 2 onlyc)1 onlyd)1 and 3 onlyCorrect answer is option 'A'. Can you explain this answer?
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