How is a public good determined?

How is a public good determined?

• A. When it benefits only a specific group
• B. If the society benefits more than the total cost
• C. When only the government can provide it
• D. By market demand and supply

Answer: (B)

A public good is determined by the overall benefit it provides to society in relation to its total cost. This concept hinges on the idea that a public good must be accessible to all members of a community regardless of individual payment, leading to a situation where the benefits to society outweigh the costs involved in its provision. For instance, public goods like national defense or clean air are enjoyed collectively, and the consumption by one individual does not reduce availability for others. This understanding distinguishes public goods from private goods, which typically provide benefits to specific individuals or groups and can be limited or restricted. The key characteristic of public goods is that they yield a greater societal benefit than the total expenditures for their supply, ensuring widespread access without charge. Thus, when the social benefits of a good exceed the total expense necessary to produce and maintain it, that good qualifies as a public good. In contrast, options that suggest specific group benefits, exclusive government provision, or market-driven supply and demand do not capture the essence of what qualifies a good as a public good. These factors alone do not ensure that the good is available to everyone or that it yields greater societal benefits compared to its costs.

A public good is determined by the overall benefit it provides to society in relation to its total cost. This concept hinges on the idea that a public good must be accessible to all members of a community regardless of individual payment, leading to a situation where the benefits to society outweigh the costs involved in its provision. For instance, public goods like national defense or clean air are enjoyed collectively, and the consumption by one individual does not reduce availability for others.

This understanding distinguishes public goods from private goods, which typically provide benefits to specific individuals or groups and can be limited or restricted. The key characteristic of public goods is that they yield a greater societal benefit than the total expenditures for their supply, ensuring widespread access without charge. Thus, when the social benefits of a good exceed the total expense necessary to produce and maintain it, that good qualifies as a public good.

In contrast, options that suggest specific group benefits, exclusive government provision, or market-driven supply and demand do not capture the essence of what qualifies a good as a public good. These factors alone do not ensure that the good is available to everyone or that it yields greater societal benefits compared to its costs.