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CA Foundation · Business Economics · Public Finance

Consider these goods: (i) a toll-free rural road with little traffic, (ii) a seat in a private cinema hall, (iii) a crowded public beach with free entry, (iv) a bottle of mineral water. Which option correctly pairs a good with its classification?

The cinema seat is a private good because it is both excludable and rival: only ticket holders may use it and one person's occupancy prevents another's. Mineral water is also private, and a crowded free beach is rival, so it is not a pure public good.

  1. ACinema seat: private good, as it is both excludable and rivalCorrect
  2. BMineral water: public good, as it is non-excludable
  3. CUncrowded free road: private good, as it is rival
  4. DCrowded free beach: pure public good, as it is non-rival

Explanation

A cinema seat can be denied to non-payers (excludable) and one person's occupation prevents another's (rival), so it is a private good. Bottled water is excludable and rival, so it is private. A crowded free beach is non-excludable but rival, i.e. a common resource, not a pure public good. An uncrowded road is mostly non-rival.

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