Explain the concept of public goods.

Public goods are goods or services that are non-excludable and non-rivalrous in nature. Non-excludability means that once the good or service is provided, it is impossible to prevent anyone from benefiting from it, regardless of whether they have paid for it or not. Non-rivalry means that the consumption of the good or service by one individual does not reduce its availability or utility for others.

Public goods are typically provided by the government or public sector because they are not efficiently provided by the market due to the free-rider problem. The free-rider problem occurs when individuals can benefit from a public good without contributing to its provision. Since it is difficult to exclude individuals from using public goods, they have no incentive to pay for them.

Examples of public goods include national defense, public parks, street lighting, and clean air. These goods are considered to have positive externalities, meaning that their provision benefits society as a whole. Public goods are often funded through taxes or government spending, as they are considered essential for the overall welfare and well-being of the population.