Which of the following statements is correct?
A)Private goods are rival in consumption and excludable.
B)Public goods are rival in consumption but nonexcludable.
C)Collecting tolls on all roads is a practical solution to traffic congestion.
D)Governments serve their citizens best when they refrain from addressing market failures.

Question

Quizplus · Accepted Answer

Private goods are rival in consumption, meaning that one person's consumption of the good reduces the amount available for others, and excludable, meaning that it is possible to prevent someone who has not paid for the good from consuming it. Examples of private goods include clothing, food, and cars.

Option B is incorrect because public goods are non-rival in consumption, meaning that one person's consumption of the good does not reduce the amount available for others, and nonexcludable, meaning that it is difficult or impossible to prevent someone from consuming the good if it is provided. Examples of public goods include national defense and street lighting.

Option C is not a universally accepted solution to traffic congestion because it imposes a cost on all road users, whether or not they are responsible for creating the congestion. In addition, collecting tolls can create additional administrative costs, and there may be difficulties in determining the optimal toll amount.

Option D is not correct because governments have an important role to play in addressing market failures, such as externalities and public goods, by providing regulations or public goods themselves.

Which of the Following Statements Is Correct