CA Foundation · Business Economics · Public Finance
A toll-free village road is rarely congested. Which classification fits the road at this stage, considering use by additional vehicles?
The uncongested toll-free village road is non-rival, because extra vehicles do not reduce others' use, and non-excludable, because no toll or barrier stops anyone. These two features together make it behave like a public good at low traffic levels.
- APrivate good, because it is made of costly materials
- BPure public good only when it is congested
- CNon-rival in consumption at low traffic, and non-excludable since there is no tollCorrect
- DCommon resource that is excludable but rival
Explanation
With little traffic, one more vehicle does not reduce others' use, so the road is non-rival. With no toll or gate, nobody can be excluded, so it is non-excludable. Both features match a public good. Option D is wrong because the road is neither excludable nor rival at low traffic.
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