Which of the following best describes the difference between a good and a service in microeconomics?

• A. Goods have no opportunity cost, while services always have an opportunity cost.
• B. A good is a tangible item that can be stored or owned, while a service is an intangible activity or benefit provided to consumers.
• C. Goods are only provided by the government, while services are only provided by private firms.
• D. A good is always non-excludable, while a service is always excludable.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the key economic concepts of goods and services. A good is typically a tangible product that can be touched, stored, and owned, such as a book or a car.
2. Step 2: Recognize that a service is intangible, meaning it cannot be physically possessed. Instead, it is an activity or benefit provided to consumers, like a haircut or legal advice.
3. Step 3: Analyze the options given by comparing them to these definitions. For example, opportunity cost applies to both goods and services, so the first option is incorrect.
4. Step 4: Consider the nature of provision. Goods and services can be provided by both private firms and governments, so the third option is inaccurate.
5. Step 5: Understand the concept of excludability. Goods and services can be either excludable or non-excludable depending on the context, so the fourth option is not universally true.