Which of the following is a public good in the economic sense?
Correct answer: B. A national defence service
- A. A privately owned restaurant meal
- B. A national defence service
- C. A cinema ticket for one customer
- D. A pair of shoes sold in a market
Explanation
National defence is generally non-excludable and non-rival in consumption, so one person's protection does not substantially reduce protection for others. The other items can usually be restricted to paying customers and are consumed individually.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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