The emission of greenhouse gases is an example of "bads" that are
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2 marks, −0.667MicroeconomicsMarket failure, externalities and public goodsPublic goods and the classification of goodsModerateabout 1 min
GATE 2023 Question 46: Market failure, externalities and public goods
Answer and worked solution
Answer: (D)
Greenhouse gas emissions are the classic example of a global public 'bad' — the negative-value mirror image of a public good.
Non-rival: one country or person's exposure to the harm from climate change (caused by cumulative global emissions) does not diminish the harm experienced by anyone else — everyone bears the shared atmospheric consequence simultaneously.
Non-excludable: it is not possible to exclude any particular country or individual from the effects of climate change caused by global emissions — there's no way to shield only 'non-payers' from a warming planet.
Both properties together (non-rival, non-excludable) are exactly what defines this as a public bad, which is why greenhouse gas mitigation faces the classic free-rider problem in international cooperation.
Therefore the answer is (D) non-rival and non-excludable.
The trap: (C) rival and non-excludable
Students sometimes intuitively think of pollution as something that gets 'used up' or 'divided' among people (implying rivalry), when in fact the atmospheric/climate effects of greenhouse gases are shared identically by everyone regardless of how many people are affected — the non-rival property is the less intuitive of the two and is the one most often mismarked.
Market failure, externalities and public goods has come up 114 times in 7 exams since 2006.
What this question tests
This question is on Public goods and the classification of goods, part of Market failure, externalities and public goods in Microeconomics.
Goods that are non-rival and non-excludable, and the condition for providing them efficiently.
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Question from the GATE 2023 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.