SACE Stage 2 Economics 2025 – 400 Free Practice Questions to Pass the Exam

Public goods are defined by two key characteristics: they are non-excludable and non-rivalrous. The option that states they are consumed simultaneously by all aligns perfectly with these characteristics. Because public goods are non-rivalrous, one person's use of the good does not diminish the ability of others to use it. A classic example of a public good is national defense; everyone benefits from it simultaneously, and one individual's consumption does not interfere with another's consumption.

In contrast, the characteristics of other options highlight misunderstandings about public goods. They are not typically produced by private firms due to the challenge of profit generation from a non-excludable good. The notion of exclusion does not apply, as individuals cannot be effectively prevented from using public goods, reinforcing their non-excludability. Lastly, public goods often do not come with personal costs; rather, their provision is typically funded through taxation, allowing society to benefit collectively without direct individual payment at the point of use.