Define non-excludability and provide a classic example.

• A. Non-excludability means producers can easily exclude non-payers from consumption.
• B. Non-excludability means the good is rival in consumption.
• C. Non-excludability means there are clear price signals to allocate consumption.
• D. Non-excludability means producers cannot easily exclude anyone from consuming the good (e.g., clean air).

Answer: (D)

Non-excludability means producers cannot easily prevent people from consuming the good, even if they don’t pay. This is why clean air is a classic example: once air is available, it’s hard to exclude someone from breathing it, and one person’s use doesn’t readily diminish another’s. This quality makes it difficult for markets to charge for usage, leading to potential underprovision absent government or collective action.

The other statements describe different ideas: being able to exclude non-payers is the opposite of non-excludability; a good that is rival in consumption refers to rivalry rather than exclusion; and having clear price signals to allocate consumption is about price-based rationing, not about whether a good can be excluded.