What is the main distinction between a public good and a private good in terms of rivalry and excludability?

• A. Public goods are excludable and rivalrous; private goods are non-excludable and non-rivalrous.
• B. Public goods are non-excludable and non-rivalrous; private goods are excludable and rivalrous.
• C. Public goods are excludable but non-rivalrous; private goods are non-excludable and rivalrous.
• D. Public goods are non-excludable and rivalrous; private goods are excludable and non-rivalrous.

Answer: (B)

The main idea tested here is how rivalry and excludability distinguish public goods from private goods. A public good is non-excludable and non-rivalrous: you can’t easily prevent people from using it, and one person’s use doesn’t reduce its availability for others. A private good is excludable and rivalrous: owners can keep others from using it, and one person’s consumption reduces what’s left for someone else. That’s why the correct description is that public goods are non-excludable and non-rivalrous, while private goods are excludable and rivalrous. The other descriptions mix up these two properties—for example, treating public goods as excludable and rivalrous or private goods as non-excludable and non-rivalrous—so they don’t fit the actual definitions.