CA Foundation · Business Economics · Public Finance
Which of the following is a private good in the economic sense?
A packet of rice bought from a shop is a private good because it is both excludable and rival. The seller can deny it to non-payers, and one person's consumption leaves none for others. Street lights, defence and flood embankments are public goods.
- AStreet lighting on a public road
- BA packet of rice bought from a shopCorrect
- CNational defence
- DFlood-control embankment protecting a whole town
Explanation
A packet of rice is excludable, since the seller can refuse those who do not pay, and rival, since once eaten it cannot be consumed by others. Street lighting, defence and flood control are non-excludable and non-rival, so they are public goods.
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 government's fiscal deficit is Rs 30,000 crore and its interest payments are Rs 18,000 crore. Which statement about the budget is correct?
- In the context of the Government Budget, which of the following is correctly classified as a capital receipt?
- A government introduces the following measures in one budget: (i) a tax on cigarettes, whose consumption imposes health costs on others; (ii…
- For a public good, the individual marginal benefits of three residents at a given quantity are Rs 40, Rs 25 and Rs 15. What is the social ma…
- In the Indian government budget, which of the following is classified as a capital receipt?
- A state government sets up a free public street lighting system because private firms cannot easily charge each user for it. Which of the fo…