Suppose a government is deciding whether to fund a lighthouse in a coastal region to assist ships navigating the waters. The lighthouse is characterized as a public good. Which of the following characteristics accurately describe why the government may need to fund it and why private firms may be unwilling to do so?
1
The lighthouse is excludable and rival in consumption, meaning only certain ships benefit from it
2
The lighthouse is non-excludable and non-rival, meaning no ship can be excluded from its benefits and one ship's use does not diminish its availability to others
3
The lighthouse is partially excludable and partially rival, meaning some ships can be excluded based on their routes
4
Private firms are likely to fund the lighthouse since they can charge ships a fee for its use
5
Question Not Attempted