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Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

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BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Which categories of goods are excludable?

a. private goods and club goods

b. private goods and common resources

c. public goods and club goods

d. public goods and common resources

To determine
Relevance of excludable goods.

Answer

Option 'a' is the correct answer.

Explanation

Option (a):

Private goods have the characteristics of excludability and rivalry. Consumption of private goods reduces the availability for others and the producer can prevent the consumption if people do not pay for it.

Club goods are those goods that are non-rivalry and excludable n nature. The consumption of these goods does not reduce the availability for others. The producers of these goods can restrict the consumption if people do not pay for it. Thus, option ‘a’ is correct.

Option (b):

Common resources are resources that are available to all the people at free of charge. In other words, common resources are not owned by any private individual or by any public sector. Since common resource is available to all with free of price, it is not possible to exclude from the consumption. So, option 'b' is incorrect.

Option (c):

Public goods are the goods that have the characteristics of non-rivalry in nature and non-excludability. One person’s consumption should not reduce the availability for other person. It is not possible to restrict other people to avail the goods those who do not pay for it. So, option 'c' is incorrect.

Option (d):

Since it is not possible to restrict people who do not pay for public goods and common resources, option 'd' is incorrect.

Concept

Concept Introduction:

Excludable goods: Excludable goods are the commodity or service where people can be prevented from enjoying its advantages if they do not pay for it.

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