Future Business Leader Achievments (FBLA) Economics Practice Exam

Which of the following best describes a public good?

1. A product that is rivalrous and excludable

2. A service available to all, regardless of income

3. A good that is typically provided by private entities

4. A commodity that can be easily restricted

The correct answer is: A service available to all, regardless of income

A public good is characterized by two main attributes: it is non-rivalrous and non-excludable. This means that one person's use of the good does not reduce its availability to others, and it is not possible to prevent people from using the good, regardless of whether they have paid for it. The answer that describes a public good as "a service available to all, regardless of income" accurately reflects its nature. Public goods such as national defense, public parks, and street lighting are available to everyone, and individuals cannot be effectively excluded from using them. This inclusive availability is essential to the concept of public goods, ensuring that all members of society can benefit from them without direct payment or restriction based on income. In contrast, other options describe characteristics of goods that do not align with the definition of public goods. For instance, a product that is rivalrous and excludable refers more to private goods where consumption by one person affects availability to others, and access can be controlled. Goods provided by private entities are typically private rather than public goods, and commodities that can be easily restricted are also private goods due to their exclusivity and the ability to limit access. Thus, the correct understanding of public goods points to inclusivity, accessibility, and