Question

3) When a city street is not congested, it is A) a private good. B) a public good. C) rival and excludable. D) a common resource E) rival and nonexcludable.

Answer 1

Solution:

To choose the correct option, we first understand what each term means. A good is rival when its use by one reduces its use for other, or satisfaction for other. A good is excludable when it cannot be used by everyone, may be because it requires some payment or fee, etc. Since street light is not congested, it implies that its use by one doesn't hamper it's advantage for other user, thus it is non-rivalrous.

A private good is both, rivalrous and excludable, thus it is an incorrect option.

A public good is the one which is neither rivalrous, nor excludable.

Option (C) is simply a feature of option (A), that is private good, thus it is again incorrect.

A common resource good is the one which is non-excludable but rivalrous (so again, option (E) is simply feature of option (D) a common resource good). So, both (D) and (E) are incorrect.

So the correct option is (B) a public good, which is non-rivalrous and non-excludable, as already stated.