Question

Which of the following statements is correct? a A public good is both rival in consumption and excludable. b A private good is not rival in consumption but is excludable. c A common resource is rival in consumption but not excludable. d A natural monopoly is neither rival in consumption nor excludable.

Answer 1

Answer:

Option (c) is correct.

Explanation:

A good is rival in consumption when the consumption by one individual reduced the availability or satisfaction level to the next person and a good is not rival when the consumption of good by one individual doesn't reduce the utility obtained from the good for other individuals.

A good is excludable when a particular person is restricted from the consumption of good and a good is non excludable when one person cannot exclude others from consuming it.

There are certain examples of common resource such as:

(i) Clean water in river

(ii) Air

(iii) a fish in the ocean

All the above goods are rival in consumption and non-excludable.

Let's talk about clean water, if a person take some water from the ocean then the water available for the other persons is reduced and one person cannot exclude other person from consuming it.