When it is costly or impossible to exclude someone who hasn’t paid to use a particular good from using it, then that good is classified as being
A public good
B nonexcludable
C free rider
D unexcludable
The correct answer and explanation is:
Correct Answer: B. Nonexcludable
A good is considered nonexcludable when it is difficult or impossible to prevent someone from accessing or using it, even if they have not paid for it. This characteristic is one of the key features that define certain types of goods, especially public goods.
For a good to be classified as nonexcludable, it must be available for use by individuals regardless of their contribution to its cost. A common example of a nonexcludable good is a lighthouse. When the lighthouse shines, it provides navigation aid to all ships in the area, including those that have not contributed to its construction or maintenance. It is not feasible to prevent any ship from benefiting from its light once it is operational.
Nonexcludability often leads to the free rider problem, which occurs when individuals benefit from a good or service without directly paying for it. Because people can use the good without paying, private firms may have little incentive to produce it, as they cannot guarantee compensation for their efforts. As a result, such goods may be underproduced or not produced at all in a free market. This market failure is a reason why governments often step in to provide nonexcludable goods, such as national defense, clean air, or public parks.
It is important to distinguish between the term nonexcludable and related terms. While a public good is both nonexcludable and nonrivalrous (meaning one person’s use does not reduce its availability to others), the term nonexcludable focuses specifically on the inability to prevent use. Options like free rider refer to the behavior of individuals rather than the good itself. Therefore, the most accurate classification of the good based on the description in the question is nonexcludable.