Dairy items, fresh fruit, and newspapers are items that are best classified as which type of good based on excludability and rivalry?

• A. Club goods, because they are excludable but non-rival.
• B. Public goods, because they are non-excludable and non-rival.
• C. Common resources, because they are rival but non-excludable.
• D. Private goods, because they are both excludable and rival in consumption.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the definitions of the key terms: Excludability means that it is possible to prevent someone from using the good if they do not pay for it. Rivalry means that one person's consumption of the good reduces the amount available for others.
2. Step 2: Analyze the characteristics of dairy items, fresh fruit, and newspapers. These goods can be sold to consumers who pay for them, so they are excludable. Also, when one person consumes these goods, they are no longer available for others, so they are rival in consumption.
3. Step 3: Compare these characteristics to the four types of goods: Private goods (excludable and rival), Club goods (excludable but non-rival), Common resources (non-excludable but rival), and Public goods (non-excludable and non-rival).
4. Step 4: Since dairy items, fresh fruit, and newspapers are both excludable and rival, classify them as private goods.
5. Step 5: Conclude that the correct classification is private goods because they meet both criteria of excludability and rivalry.