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1. Public goods can be provided through a market mechanism.
2. The consumption of public goods by several individuals prevents some individuals from using it.
3. 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)none
- d)1 and 3 only
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
1. Public goods can be provided through a market mechanism.2. The cons...
Public goods are those goods that are non-excludable and non-rivalrous in nature. Non-excludability means that it is not possible to exclude an individual from consuming the good once it is provided, while non-rivalrous means that the consumption of the good by one individual does not reduce the availability of the good for others.
The given statements are:
1. Public goods can be provided through a market mechanism.
2. The consumption of public goods by several individuals prevents some individuals from using it.
3. An individual who does not pay for a public good cannot be excluded from enjoying its benefits.
Out of these, the correct statement(s) is/are:
Statement 1 is incorrect. Public goods cannot be provided through a market mechanism as they are non-excludable and non-rivalrous in nature. Since it is not possible to exclude anyone from using the good, it is not possible to charge a price for it.
Statement 2 is incorrect. The consumption of public goods by several individuals does not prevent some individuals from using it. Public goods are non-rivalrous in nature, which means that the consumption of the good by one individual does not reduce the availability of the good for others.
Statement 3 is correct. An individual who does not pay for a public good cannot be excluded from enjoying its benefits. This is because public goods are non-excludable in nature, which means that it is not possible to exclude anyone from using the good once it is provided.
Therefore, the correct statement is 3 only.
The given statements are:
1. Public goods can be provided through a market mechanism.
2. The consumption of public goods by several individuals prevents some individuals from using it.
3. An individual who does not pay for a public good cannot be excluded from enjoying its benefits.
Out of these, the correct statement(s) is/are:
Statement 1 is incorrect. Public goods cannot be provided through a market mechanism as they are non-excludable and non-rivalrous in nature. Since it is not possible to exclude anyone from using the good, it is not possible to charge a price for it.
Statement 2 is incorrect. The consumption of public goods by several individuals does not prevent some individuals from using it. Public goods are non-rivalrous in nature, which means that the consumption of the good by one individual does not reduce the availability of the good for others.
Statement 3 is correct. An individual who does not pay for a public good cannot be excluded from enjoying its benefits. This is because public goods are non-excludable in nature, which means that it is not possible to exclude anyone from using the good once it is provided.
Therefore, the correct statement is 3 only.
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Community Answer
1. Public goods can be provided through a market mechanism.2. The cons...
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 leadsto a problem of “Free-reider”. 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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1. Public goods can be provided through a market mechanism.2. The consumption of public goods by several individuals prevents some individuals from using it.3. 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)noned)1 and 3 onlyCorrect answer is option 'A'. Can you explain this answer?
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