Question

Public policy and taxes, you state department is considering incorporating toll booths with gates on a quiet section of the highway. If this is done, what type of goods would be produced?

1) Rival and excludable goods
2) Rival but non-excludable goods
3) Non-rival but excludable goods
4) Non-rival and non-excludable goods

Answer 1

Toll booths on a highway would produce non-rival but excludable goods, as they allow access to multiple users without limiting use (non-rival) but require payment (excludable).

Step-by-step explanation:

If the state department is considering incorporating toll booths with gates on a quiet section of the highway, the type of goods that would be produced is non-rival but excludable goods. These are known as toll goods, which means they can be used by more than one person at a time without limiting the availability of the service (non-rival) but only if those individuals can pay the fee to access them (excludable). Toll goods are distinct from public goods, which are both non-rival and non-excludable, meaning they can be used freely by anyone without affecting the availability and without easily excluding non-payers. Examples of toll goods include services such as private schools, cable TV, and the toll highways in question. Government policy plays a key role in determining the costs and benefits distribution of these goods to society.