Consider the following statements about excludability:
(A) In the case of private goods, anyone who does not pay for the goods can be excluded from enjoying their benefits.
(B) In the case of public goods, there is no feasible way of excluding anyone from enjoying their benefits.
(C) It is easy to collect fees from all the users of a public good.
(D) Consumers voluntarily pay for public goods that they can get for free.
(E) For public goods, the link between the producer and the consumer through the payment process is broken.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (E) only
A public good is non-excludable: no one can be kept from its benefits, so payment cannot be enforced.
(A) In the case of private goods, anyone who does not pay for the goods can be excluded from enjoying their benefits. — Correct. No ticket, no movie.
(B) In the case of public goods, there is no feasible way of excluding anyone from enjoying their benefits. — Correct. This is non-excludability.
(C) It is easy to collect fees from all the users of a public good. — Incorrect. It is difficult and sometimes impossible to collect fees.
(D) Consumers voluntarily pay for public goods that they can get for free. — Incorrect. Consumers will not pay for what they can get free.
(E) For public goods, the link between the producer and the consumer through the payment process is broken. — Correct. So the government must step in.
NCERT (2026-27): “Allocation Function of Government Budget … Two, in case of private goods anyone who does not pay for the goods can be excluded from enjoying its benefits. If you do not buy a ticket, you will not be allowed to watch a movie at a local cinema hall. However, in case of public goods, there is no feasible way of excluding anyone from enjoying the benefits of the good. That is why public goods are called non-excludable. Even if some users do not pay, it is difficult and sometimes impossible to collect fees for the public good. These non-paying users are known as ‘free-riders’. Consumers will not voluntarily pay for what they can get for free and for which there is no exclusive title to the property being enjoyed. The link between the producer and consumer which occurs through the payment process is broken and the government must step in to provide for such goods. …” |