Question

What are the two characteristics of public goods? Why is it that private producers do not “produce” public goods like national defense? Explain your answer below in no more than four sentences.

Answer 1

• Public goods are those goods that are usually produced by the government and are available to all the people of a community.
• The two main characteristics of public goods are :- non excludable and non rival.
• They are non excludable in nature as people who does not pay for a good cannot be excluded from using it.
• They are non rival in nature as one person's consumption will not decrease a goods availability for others.
• Public goods like National defence cannot be produced by private producers.
• This is because, such firm's prevent the non payer's from reaping the benefits of a good until they pay for it.