Question

Which of the following statements are correct about the contrast between pure public and pure private goods? 

(A) The total provision of pure private goods is the sum of private consumption, whereas the total provision of pure public goods is equal between individuals. 
(B) The consumer in general pays the same prices and consumes different quantities of the good when there is efficient provision of pure private goods. 
(C) The consumer pays different prices and consumes the same quantity of the good when there is efficient provision of pure public goods. 
(D) Atomistic markets ensure efficient provisioning for both pure private as well as pure public goods. 
Choose the correct answer from the options given below:
 

• A. (A), (B) and (D) only
• B. (A), (B) and (C) only
• C. (B), (C) and (D) only
• D. (A), (B), (C) and (D)

Hint:

Public goods require government intervention or collective action for efficient provision, as atomistic markets cannot address the free-rider problem.

Answer 1

The Correct Option is B

Step 1: Understand the characteristics of public and private goods.
Private goods are those that are consumed by individuals, and their consumption reduces the availability for others. Public goods, on the other hand, are non-rivalrous and non-excludable, meaning consumption by one individual does not reduce the availability for others.

Step 2: Analysis of options.
- (A) The total provision of pure private goods is the sum of private consumption, whereas the total provision of pure public goods is equal between individuals: This is correct. Private goods are consumed individually, whereas public goods are consumed collectively.
- (B) The consumer in general pays the same prices and consumes different quantities of the good when there is efficient provision of pure private goods: This is correct. In private goods markets, consumers pay the same price, but they may consume different quantities based on their preferences and income.
- (C) The consumer pays different prices and consumes the same quantity of the good when there is efficient provision of pure public goods: This is correct. Public goods are typically provided at the same level for all consumers, but their funding may vary (e.g., via taxes or contributions).
- (D) Atomistic markets ensure efficient provisioning for both pure private as well as pure public goods: This is incorrect. Atomistic markets, where many small firms and consumers operate, are typically more efficient for private goods, but they do not ensure efficient provisioning of public goods due to the free rider problem.

Step 3: Conclusion.
The correct answer is (A), (B), and (C) only.