Question

Consider the following services/goods:
(1) Police
(2) National defence
(3) Tax subsidies
Which of the services/goods given above is/are included in the 'public goods' of an economy?

• A. 1 and 2
• B. 1 and 3
• C. 2 and 3
• D. Only 2

Answer 1

The correct option is A 1 and 2

A good or service which can be consumed by anyone without reducing its availability to others and no one is excluded of its consumption or services is called a public good. National defence and police are such services. Tax subsidies, on the other hand, are available to select people and its use reduces its availability to others.