A private aerospace firm operates a satellite network that transmits real-time meteorological telemetry. Initially, the telemetry is broadcast unencrypted, allowing any weather station with standard receiver equipment to access it free of charge. The firm then introduces a proprietary encryption standard, meaning only stations that pay an annual subscription fee can decrypt and use the data.
Which of the following describes the change in the economic classification of the telemetry service?
It transitions from a pure public good to a private good because access is now restricted to paying customers.
It transitions from a quasi-public good to a private good because the marginal cost of supplying an additional subscriber rises above zero.
It transitions from a pure public good to a quasi-public good because it becomes excludable while remaining non-rival in consumption.
It transitions from a private good to a pure public good because the market failure associated with the free-rider problem is resolved.
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.