A Level Economics AQA Practice Exam

Which of the following statements is true regarding private goods?

1. They are consumed by everyone without limitation

2. They are non-excludable and non-rivalrous

3. They are both excludable and rivalrous

4. They provide large positive externalities

The correct answer is: They are both excludable and rivalrous

Private goods are characterized by two main features: they are both excludable and rivalrous. Excludable means that individuals can be prevented from using these goods if they do not pay for them. Rivalrous indicates that one person's consumption of the good reduces the amount available for others. An example that illustrates these characteristics is a sandwich. If one person eats the sandwich, that specific sandwich is no longer available for anyone else. Additionally, if someone wants a sandwich, they typically need to pay for it; otherwise, they cannot access it. Understanding these features of private goods helps clarify why the correct answer is accurate. Other options describe characteristics not applicable to private goods, such as being consumed by everyone without limitation or providing large positive externalities, which are more applicable to public goods. The defining traits of private goods are what make the answer correct.