{"id":91023,"date":"2025-06-01T10:44:20","date_gmt":"2025-06-01T10:44:20","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=91023"},"modified":"2025-06-01T10:44:20","modified_gmt":"2025-06-01T10:44:20","slug":"consider-the-following-statements-regarding-public-goods-and-externali","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/","title":{"rendered":"Consider the following statements regarding Public Goods and Externali"},"content":{"rendered":"<p>Consider the following statements regarding Public Goods and Externalities :<\/p>\n<ul>\n<li>1. Non-rivalry and non-excludability are two characteristics of Public Goods<\/li>\n<li>2. Market can provide the optimal amount of a good in the presence of externalities<\/li>\n<\/ul>\n<p>Which of the statements given above is\/are correct ?<\/p>\n<p>[amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 nor 2&#8243; correct=&#8221;option1&#8243;]<\/p>\n<div class=\"psc-box-pyq-exam-year-detail\">\n<div class=\"pyq-exam\">\n<div class=\"psc-heading\">This question was previously asked in<\/div>\n<div class=\"psc-title line-ellipsis\">UPSC CAPF &#8211; 2024<\/div>\n<\/div>\n<div class=\"pyq-exam-psc-buttons\"><a href=\"\/pyq\/pyq-upsc-capf-2024.pdf\" target=\"_blank\" class=\"psc-pdf-button\" rel=\"noopener\">Download PDF<\/a><a href=\"\/pyq-upsc-capf-2024\" target=\"_blank\" class=\"psc-attempt-button\" rel=\"noopener\">Attempt Online<\/a><\/div>\n<\/div>\n<section id=\"pyq-correct-answer\"> Statement 1 is correct. Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. <\/section>\n<section id=\"pyq-key-points\"> Public goods and externalities are classic examples of market failures, where the unfettered market mechanism does not lead to a socially optimal outcome. <\/section>\n<section id=\"pyq-additional-information\"> Government intervention, such as direct provision (for public goods) or Pigouvian taxes\/subsidies, regulations, or tradable permits (for externalities), is often required to address these market failures and move towards a more efficient allocation of resources. <\/section>\n","protected":false},"excerpt":{"rendered":"<p>Consider the following statements regarding Public Goods and Externalities : 1. Non-rivalry and non-excludability are two characteristics of Public Goods 2. Market can provide the optimal amount of a good in the presence of externalities Which of the statements given above is\/are correct ? [amp_mcq option1=&#8221;1 only&#8221; option2=&#8221;2 only&#8221; option3=&#8221;Both 1 and 2&#8243; option4=&#8221;Neither 1 &#8230; <\/p>\n<p class=\"read-more-container\"><a title=\"Consider the following statements regarding Public Goods and Externali\" class=\"read-more button\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/#more-91023\">Detailed Solution<span class=\"screen-reader-text\">Consider the following statements regarding Public Goods and Externali<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1085],"tags":[1103,1120,1261],"class_list":["post-91023","post","type-post","status-publish","format-standard","hentry","category-upsc-capf","tag-1103","tag-economic-development","tag-nature-of-indian-economy","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Consider the following statements regarding Public Goods and Externali<\/title>\n<meta name=\"description\" content=\"Statement 1 is correct. Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. Public goods and externalities are classic examples of market failures, where the unfettered market mechanism does not lead to a socially optimal outcome.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Consider the following statements regarding Public Goods and Externali\" \/>\n<meta property=\"og:description\" content=\"Statement 1 is correct. Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. 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Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. Public goods and externalities are classic examples of market failures, where the unfettered market mechanism does not lead to a socially optimal outcome.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/","og_locale":"en_US","og_type":"article","og_title":"Consider the following statements regarding Public Goods and Externali","og_description":"Statement 1 is correct. Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. Public goods and externalities are classic examples of market failures, where the unfettered market mechanism does not lead to a socially optimal outcome.","og_url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/","og_site_name":"MCQ and Quiz for Exams","article_published_time":"2025-06-01T10:44:20+00:00","author":"rawan239","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rawan239","Est. reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/","url":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/","name":"Consider the following statements regarding Public Goods and Externali","isPartOf":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#website"},"datePublished":"2025-06-01T10:44:20+00:00","dateModified":"2025-06-01T10:44:20+00:00","author":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209"},"description":"Statement 1 is correct. Public goods are defined by two main characteristics: non-rivalry (consumption by one person does not reduce availability for others) and non-excludability (it is difficult or impossible to prevent individuals who have not paid from consuming the good). Examples include national defense or street lighting. Statement 2 is incorrect. Markets typically fail to provide the optimal amount of a good when externalities are present. Negative externalities (like pollution) lead the market to produce too much of a good from a societal perspective, while positive externalities (like vaccination) lead the market to produce too little. The market price does not reflect the full social costs or benefits in the presence of externalities, leading to inefficiency. Public goods and externalities are classic examples of market failures, where the unfettered market mechanism does not lead to a socially optimal outcome.","breadcrumb":{"@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/exam.pscnotes.com\/mcq\/consider-the-following-statements-regarding-public-goods-and-externali\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/exam.pscnotes.com\/mcq\/"},{"@type":"ListItem","position":2,"name":"UPSC CAPF","item":"https:\/\/exam.pscnotes.com\/mcq\/category\/upsc-capf\/"},{"@type":"ListItem","position":3,"name":"Consider the following statements regarding Public Goods and Externali"}]},{"@type":"WebSite","@id":"https:\/\/exam.pscnotes.com\/mcq\/#website","url":"https:\/\/exam.pscnotes.com\/mcq\/","name":"MCQ and Quiz for Exams","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/exam.pscnotes.com\/mcq\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/5807dafeb27d2ec82344d6cbd6c3d209","name":"rawan239","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/exam.pscnotes.com\/mcq\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/761a7274f9cce048fa5b921221e7934820d74514df93ef195a9d22af0c1c9001?s=96&d=mm&r=g","caption":"rawan239"},"sameAs":["https:\/\/exam.pscnotes.com"],"url":"https:\/\/exam.pscnotes.com\/mcq\/author\/rawan239\/"}]}},"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/91023","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/comments?post=91023"}],"version-history":[{"count":0,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/posts\/91023\/revisions"}],"wp:attachment":[{"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/media?parent=91023"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/categories?post=91023"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/exam.pscnotes.com\/mcq\/wp-json\/wp\/v2\/tags?post=91023"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}