Q. Consider the following statements with reference to difference between public and private goods:

1. Public goods are always non-excludable.
2. Public goods may be produced by the government or the private sector.

Which of the above is / are correct?
Answer: Both 1 and 2
Notes: Both are correct statements. In case of public goods, there is no feasible way of excluding anyone from enjoying the benefits of the good. That is why public goods are called non-excludable. Even if some users do not pay, it is difficult and sometimes impossible to collect fees for the public good. These non- paying users are known as ‘free-riders’. Public goods may be produced by the government or the private sector. When goods are produced directly by the government it is called public production.