What does excludability refer to in the context of market goods?

• A. Rivalry refers to whether one person's consumption reduces another's.
• B. Excludability is the ability to exclude non-payers from consumption.
• C. Non-excludable goods are those for which the provider can easily exclude non-payers from consumption.
• D. Excludability has no relation to payment.

Answer: (B)

Excludability is about whether the producer can prevent people who don’t pay from using the good. If a good is excludable, a firm can charge a price and restrict access to paying customers, like a private park or a restaurant. If it’s not excludable, non-payers can’t be easily kept out, as with clean air or national defense, so people can benefit without paying. This distinction helps explain why some goods are efficiently provided by markets while others lead to market failure due to free riding.

Rivalry is a separate idea: it describes whether one person’s consumption reduces another’s ability to consume the same good. The statement that non-excludable goods are those for which the provider can easily exclude non-payers is the opposite of the truth, and saying excludability has no relation to payment ignores the basic way excludability is enforced—through charging and restricting access.