Which of the following is a characteristic of a public good?

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BlackTom AI · Accepted Answer

Consider the question about a characteristic of a public good and evaluate each option.
Option 1: It is excludable. Public goods are typically non-excludable, meaning that individuals cannot be easily excluded from consuming the good once it is provided. Therefore, this statement is inaccurate as a general characteristic of public goods.
Option 2: It is nonrival in consumption. This is a defining feature of public goods: one person’s consumption does not reduce the amount available for others. This nonrivalry is a key reason private markets may underprovide public goods, since individuals cannot be easily charged for use. Therefore, this statement correctly describes a public good.
Option 3: It yields substantial spillover costs. Spillover costs refer to negative externalities affecting third parties. While public goods can have broad societal impacts, the hallmark feature of a public good is non-rivalry and non-excludability, not a claim about spillover costs. This option conflates externalities with the core defining property, so it’s not a standard characteristic.
Option 4: The private sector would produce a larger than socially optimal quantity. In fact, private markets tend to underprovide public goods because of the free-rider problem and non-excludability, leading to quantities that are below the socially optimal level. This makes the statement incorrect regarding public goods.
Option 5: Private-sector producers would realize too great a profit. Public goods are often not profitable for private firms to supply at efficient levels due to non-excludability and non-rivalry, which reduces potential profits and makes this assertion incorrect as a characteristic of public goods.

AP Economics-Hillebrand Quiz Micro 6.1-6.3- Requires Respondus LockDown Browser

Which of the following is a characteristic of a public good?

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