Suppose that a state installs a toll booth on a highway and requires drivers to pay $1.00 before entering the highway. Installation of the toll booth changes
A) a nonexcludable good into an excludable good.
B) a nonrival good into a rival good.
C) public good into a private good.
D) a nonrival good into a nonexcludable good.

Question

Quizplus · Accepted Answer

The installation of a toll booth on a highway makes the previously nonexcludable good (open access to the highway) excludable, as people must pay the toll to enter. It does not change the rivalrous nature of the good or make it completely private, so choices B and C are incorrect. It also does not affect the nonrivalrous nature of the good, so choice D is also incorrect.

Suppose That a State Installs a Toll Booth on a Highway