What constitutes the fundamental definition of an 'economic public good' in welfare economics?
Answer and explanation
Correct answer: A. non-excludable and non-rivalrous in use
- Step 1: In public economics, a pure public good must satisfy two precise criteria: non-excludability and non-rivalry in consumption. Non-excludable means non-payers cannot be prevented from enjoying it; non-rivalrous means one person's consumption does not diminish availability for others (e.g., national defense, lighthouses). Answer: non-excludable and non-rivalrous in use. Why not the others: "expensive and manufactured by private firms" confuses private market consumer goods with the structural definition of public goods; "rationed by government coupon booklets" describes wartime price-controlled rationing of scarce private goods like bread or fuel; "consumed exclusively by wealthy elites" describes luxury Veblen goods, the direct opposite of universal non-excludable public goods.
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