Which of the following is an example of a public good?

• A. A private gym membership
• B. National defense
• C. A congested toll road
• D. A cup of coffee

Answer: (B)

Public goods have two key features: they are non-excludable and non-rivalrous. That means people cannot be effectively barred from using them, and one person’s use doesn’t reduce another person’s ability to use them. National defense fits perfectly because once a country is defended, everyone in the country benefits, and you can’t exclude someone from that protection or have one person’s defense diminish another’s.

In contrast, a private gym membership can be restricted to members (excludable) and the gym’s limited space means one person’s workout uses up capacity that could have been used by someone else (rivalrous). A congested toll road allows toll-based exclusion and congestion makes its use rivalrous as more drivers slow everyone down. A cup of coffee can be bought and enjoyed by one person, so it’s excludable and rivalrous.