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    Question

    Which of the following is the best example of a 'Public

    Good' as defined in Public Economics?
    A A toll highway Correct Answer Incorrect Answer
    B National defense Correct Answer Incorrect Answer
    C A private college education Correct Answer Incorrect Answer
    D A community park with an entry fee Correct Answer Incorrect Answer
    E Cable television Correct Answer Incorrect Answer

    Solution

    A pure public good has two key characteristics: 1. Non-rivalry: One person's consumption does not reduce the amount available for others. 2. Non-excludability: It is impossible or prohibitively costly to prevent someone from enjoying the good. National defense is the classic example: protecting the country for one citizen does not diminish protection for others (non-rival), and you cannot exclude any citizen within the borders from its benefits (non-excludable). A toll highway is excludable (via tolls). A private college is both rival and excludable. A park with a fee is excludable.

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