Which example best illustrates a public good?

• A. Public library
• B. Private car
• C. Toll road
• D. Lighthouse

Answer: (D)

A public good is something that is non-excludable and non-rivalrous: you can’t easily prevent people from benefiting, and one person’s use doesn’t reduce another’s. A lighthouse fits this perfectly — its light helps all ships in the area, and you can’t realistically charge or block ships from benefiting. One ship’s use of the light doesn’t diminish the benefit for others.

The other examples aren’t pure public goods. A public library is excludable (you usually need a library card) and borrowing books can reduce availability. A private car is excludable and rivalrous (owning and using it excludes others and uses up scarce road space). A toll road is excludable (you must pay) and its use is rivalrous when traffic congestion reduces others’ experience.