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Essentials of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091992

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BuyFindarrow_forward

Essentials of Economics (MindTap C...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091992
Chapter 11, Problem 3CQQ
Textbook Problem
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Which of the following is an example of a public good?

a. residential housing

b. national defense

c. restaurant meals

d. fish in the ocean

To determine

  Relevance of public goods.

Explanation of Solution

Option (b):

Provision of the defense service to few people does not reduce the availability for other people. Also it is not possible to restrict the services for the people who do not pay for it. Since the defense service has the characteristics of non-excludability and non-rival in consumption, option 'b' is correct.

Option (a):

Buying residential housing reduces the availability for other people. Also people have to pay for it. Since residential housing has the characteristics of excludability and rivalry in consumption, option 'c' is incorrect...

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