Is there a paradox to the statement, the marginal cost of producing a pure public good...

Is there a paradox to the statement, the marginal cost of producing a pure public good is always positive, some consumers can enjoy the benefits of pure public goods at zero marginal costs?

Expert Solution

Public goods are goods with benefits that cannot be withheld from those who do not pay and are shared by large group of consumers. Hence, goods such as street lights , public water supplies , motorways are provided by the government to all its citizens as one consumer does not restrict consumption by other consumers- in other words the marginal cost of supplying a public good to an extra person is zero. It it is supplied to one person, it is available to all. Therefore responsible authorities incur positive cost in installation for the benefit of society. Because public goods are non-excludable ,it is difficult to charge people for benefitting since most public goods are provided mostly free at the point of use and then paid for out of general taxation or in form of charge such as a license fee. Consumers enjoy most of benefits derived from pure public goods as it cannot be confined solely to those who have paid for it, indeed non-payers can enjoy the benefits of consumption at an financial cost.

Rahul Sunny answered 1 year ago

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