| Direction: Q. 6 to 10 |
| Read the given case study and answer the questions. |
| Traditional economic theory viewed capital in physical terms only. Economists during the late 1950's based on aggregate production function, found that the standard measures of simple labour and physical capital were incapable of explaining adequately the rapid post-war growth. Speculations on what was missing were diverse. Some argued that the principal explanation lays in the lack of appropriate adjustments for improvement in the quality of physical capital and the embodiment of technical progress in that capital. Others suggested that the most important omission pertains to the organisational advance or a vaguely specified 'human capital'. The residual of unexplained growth was at first ascribed to technology by Solow, but later, the residual was defined to include improvements in the quality of capital and the investment in human beings. Human capital is formed with improvement in skills and education. Improved health and education is a merit as well as a public good and is associated with large number of externalities which are often indirect, indivisible and non-quantifiable. |
A) Excludable and non-rivalrous in nature
B) Non-excludable and non-rivalrous in nature
C) Non-excludable and rivalrous in nature
D) Excludable and rivalrous in nature
Correct Answer: B
Solution :
Public goods are non-excludable and non-rivalrous in nature. Non-excludable as no one can be excluded from using the public goods, whereas it is non rivalrous because consumption by one does not reduce consumption for another person.
You need to login to perform this action.
You will be redirected in
3 sec
