ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The lack of excludability means that, in contrast to private goods, businesses cannot sell or charge for each unit of a public good that is consumed. Thus, there is less profit incentive to produce public goods than to produce private goods.

Detailed explanation-2: -The problem with goods with externalities is that private market transactions do not produce efficient amounts of these goods. Private market transactions will lead to overproduction of goods with negative externalities and underproduction of goods with positive externalities.

Detailed explanation-3: -Public goods problems are often closely related to the “free-rider” problem, in which people not paying for the good may continue to access it. Thus, the good may be under-produced, overused or degraded.

Detailed explanation-4: -A public good has two key characteristics: it is nonexcludable and nonrivalrous. These characteristics make it difficult for market producers to sell the good to individual consumers. Nonexcludable means that it is costly or impossible for one user to exclude others from using a good.

Detailed explanation-5: -Non-Excludable Goods. Non-excludable goods are public goods that cannot exclude a certain individual or group of individuals from using them. For this reason, it is nearly impossible to restrict access to the consumption of non-excludable goods. A public road is an example of a non-excludable good.