CBSE 2025, Set 1

Question

Read the following statements carefully:

Statement 1: Public goods are those goods for which the payments are made by all the entities in the country.
Statement 2: Private goods are those goods which are provided by the government of a country at subsidised rates.

In the light of the given statements, choose the correct option from the following: A). Statement 1 is true and Statement 2 is false. B). Statement 1 is false and Statement 2 is true. C). Both Statements 1 and 2 are true. D). Both Statements 1 and 2 are false.

Edvaya · Accepted Answer

The correct answer is Both Statements 1 and 2 are false.. (D) Both Statements 1 and 2 are false.

*Explanation:*
Statement 1 is false because public goods (like national defense) are non-excludable and non-rivalrous; they are funded through general taxation, but direct "payment by all entities" is not a defining characteristic for their consumption. Statement 2 is false because private goods are generally provided by the free market based on the price mechanism, not necessarily by the government at subsidized rates.

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Economics > Introductory Macroeconomics > Government Budget

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