Which of the following statements about canal and turnpike transportation is true in the context of public goods and optimal quantity?

• A. Turnpike transportation is a public good because anyone can use it without paying, whereas canal transportation is a private good.
• B. Both canal and turnpike transportation are always non-excludable and non-rivalrous, making them pure public goods.
• C. Neither canal nor turnpike transportation can be analyzed using the concept of optimal quantity for public goods.
• D. Canal transportation is often considered a public good because it is non-excludable and non-rivalrous, while turnpike transportation is typically a private good due to excludability.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definitions of public goods and private goods. A public good is characterized by being non-excludable (people cannot be prevented from using it) and non-rivalrous (one person's use does not reduce availability to others). A private good is excludable and rivalrous.
2. Step 2: Analyze canal transportation in terms of these characteristics. Canals often allow multiple users to navigate without preventing others from doing so, and it is difficult to exclude users from access, making it non-excludable and non-rivalrous, which aligns with the definition of a public good.
3. Step 3: Analyze turnpike transportation. Turnpikes are toll roads where users must pay to access them, making them excludable. Additionally, congestion can occur, making the good rivalrous to some extent. Therefore, turnpikes are typically considered private goods.
4. Step 4: Recognize that because canal transportation is a public good, the concept of optimal quantity (where marginal social benefit equals marginal social cost) applies to it, as public goods often require government intervention to reach optimal provision.
5. Step 5: Understand that turnpike transportation, being a private good, is usually provided by the market, and the concept of optimal quantity is analyzed differently, focusing on private costs and benefits rather than public provision.