Which of the following best exemplifies the sharing economy in the context of public goods and optimal quantity?

• A. Monopolistic competition in the market for consumer electronics
• B. Private firms producing goods for exclusive consumption
• C. Government provision of national defense
• D. Platforms that allow individuals to rent out their unused assets, such as ride-sharing or home-sharing services

Answer: (D)

Verified step by step guidance

1. Understand the concept of the sharing economy: it involves platforms that enable individuals to share or rent out their underutilized assets directly to others, often increasing the efficient use of resources.
2. Recall the definition of public goods: these are goods that are non-excludable and non-rivalrous, meaning one person's consumption does not reduce availability to others, and people cannot be easily excluded from using them.
3. Analyze each option in terms of how it relates to public goods and the sharing economy: monopolistic competition and private firms producing exclusive goods do not typically involve shared use of assets or public goods characteristics.
4. Recognize that government provision of national defense is a classic example of a public good but does not represent the sharing economy, as it is centrally provided and not based on peer-to-peer sharing.
5. Identify that platforms allowing individuals to rent out unused assets (like ride-sharing or home-sharing) best exemplify the sharing economy because they facilitate peer-to-peer sharing of private goods, increasing efficiency and access.