A municipal authority builds a major coastal storm surge barrier to protect 5,000 5,000\,5,000 low-lying homes from flooding. Once built, it is impossible to prevent any individual home in the bay from benefiting from the flood protection, and protection for one home does not diminish the protection of others. However, the authority builds a scenic pedestrian pathway along the top of the barrier and charges an entry fee via turnstiles during the tourist season to prevent overcrowding.
Which of the following statements correctly identifies the economic classification of these two elements?
The flood protection is a pure public good as it is non-rival and non-excludable, while the pedestrian pathway is a quasi-public good because it is excludable but non-rival up to the point of congestion.
The entire barrier must be classified as a pure public good because flood protection is non-rejectable, which economically prevents the authority from charging for any auxiliary features of the structure.
The flood protection is a private good because only local property owners in the bay benefit, while the pedestrian pathway is a pure public good because it is funded and managed by a public authority.
The flood protection is a quasi-public good because the authority could theoretically exclude specific houses, while the pathway is a private good because it is fully rival and excludable at all times.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.