CA Foundation · Business Economics · Public Finance
A private firm installs a toll-free street light on a lane and finds it cannot stop non-paying residents from benefiting. Which characteristic of public goods does this inability to restrict access illustrate?
The correct answer is non-excludability. When a supplier cannot prevent non-paying people from benefiting from a good, such as a street light, the good is non-excludable. This differs from non-rivalry, which means one person's consumption does not reduce what is available to others.
- ANon-excludabilityCorrect
- BNon-rivalry
- CRivalry in consumption
- DExcludability
Explanation
Non-excludability means that once a good is provided, people who do not pay cannot be prevented from using it. The firm cannot stop non-payers from enjoying the light. Non-rivalry is a different feature: it concerns one person's use not reducing another's, not the ability to restrict access.
Did you get it right without looking?
One question tells you little. A timed set on Public Finance shows your real accuracy, how long you take and where you lose marks.
More Public Finance questions
- A person gets vaccinated against a contagious disease, which also lowers the infection risk for others around. Without government interventi…
- Which of the following statements about the government's role in correcting market failure is correct?
- A government's fiscal deficit is Rs 6,00,000 crore, of which interest payments are Rs 2,00,000 crore. What is its primary deficit, and what …
- A tax is levied so that the burden on a taxpayer rises more than proportionately as income rises, meaning the average tax rate increases wit…
- Which of the following is a market-based instrument used to correct a negative externality such as industrial emissions?
- A steel plant in Odisha has a private marginal cost of Rs 400 per tonne and causes pollution damage of Rs 90 per tonne to nearby villages. T…