ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, a public good refers to a commodity or service that is made available to all members of a society. Typically, these services are administered by governments and paid for collectively through taxation. Examples of public goods include law enforcement, national defense, and the rule of law.

Detailed explanation-2: -Government spending and taxes are one way to provide public goods, but they’re not the only way. In some cases, markets can produce public goods.

Detailed explanation-3: -Why does the government usually supply public goods instead of private companies? For starters, the free rider problem. Free riders are the consumers who don’t pay in order to consume the public good. Since public goods are free, most consumers become free riders because they have no incentive to pay the supplier.

Detailed explanation-4: -Public goods are provided as a whole to the society by the government and the consumption of these goods by an individual doesn’t reduce its availability or doesn’t exclude others from consuming it. Therefore, public goods are non-rivalry and non-excludability.