A Level Economics AQA Practice Exam

What is the definition of excludability?

1. The ability to limit access to a good

2. The inability to restrict consumption of a good

3. The quality of reducing availability for others

4. The market demand for a good

The correct answer is: The ability to limit access to a good

Excludability refers to the ability to restrict access to a good, which is fundamental in determining how goods are allocated and consumed in an economy. When a good is excludable, it means that producers can prevent those who do not pay for the good from accessing it, ensuring they can sell it at a price. This characteristic is crucial for private goods, where owners can charge a price and deny access to non-payers, thus allowing them to recoup production costs and potentially make a profit. Understanding excludability is significant because it relates directly to market dynamics, particularly in cases where a good is marketed effectively or where public goods might fail if they are not excludable. For instance, think about necessities like a concert ticket; if it is excludable, only those who purchase the ticket can attend, thus limiting others' access based on their willingness to pay. In contrast, the other options do not capture the essence of excludability as clearly. The concept of restricting access aligns squarely with how certain goods can be managed in terms of consumption and marketability.