CA Foundation · Business Economics · Public Finance
A public good such as national defence is described as non-rival in consumption. What does this mean?
Non-rivalry means one person's use of the good does not diminish what is left for others, as with national defence. Excludability is a separate property concerning whether non-payers can be kept out, so it should not be confused with non-rivalry.
- AOne person's consumption does not reduce the amount available to othersCorrect
- BConsumers can be excluded if they do not pay
- CThe good is supplied only by private firms
- DThe good has a rising marginal cost for every extra user
Explanation
Non-rivalry means that when one person enjoys the good, the quantity available to others is not reduced. Option B describes excludability, which public goods typically lack (non-excludability), so it is a different property. Options C and D are not features of public goods.
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