Distinguish between a public good and a private good in terms of excludability and rivalry, with examples.

• A. Private goods are excludable and rival (e.g., a sandwich); public goods are non-excludable and non-rival (e.g., national defense).
• B. Private goods are non-excludable and non-rival; public goods are excludable and rival.
• C. Private goods are excludable but non-rival; public goods are non-excludable but rival.
• D. Private goods are non-rival and excludable; public goods are rival and non-excludable.

Answer: (A)

Excludability and rivalry determine whether a good is private or public. Excludability means you can prevent someone who hasn’t paid from using the good, and rivalry means one person’s use reduces another’s ability to use the same unit.

A private good is both excludable and rival. A sandwich is a clear example: you can prevent others from taking it, and when you eat it there’s less for someone else. Because it’s excludable and rival, markets can price and allocate it efficiently.

A public good is non-excludable and non-rival. National defense is a classic example: you can’t realistically exclude people from being protected, and one person’s protection doesn’t reduce another’s. Because of non-excludability and non-rivalry, these goods are often provided by the government to avoid underprovision due to the free-rider problem.

So the correct characterization is that private goods are excludable and rival, while public goods are non-excludable and non-rival. Other descriptions would blur these properties, such as private goods being non-excludable or non-rival, which doesn’t match how they are consumed and priced.