AP Microeconomics

Category - Microeconomics

What is it called when there is a situation in which it is too costly to prevent people who refuse to pay from enjoying the benefits of a good or a service?
  1. An externality
  2. Inelastic
  3. Rationing
  4. Non-exclusion
Explanation
Answer - D - When there is a situation in which it is too costly to prevent people who refuse to pay from enjoying the benefits of a good or a service, it is called “non-exclusion.”

Key Takeaway: Basically, the exclusion principle states that “the owner of a private good may exclude others from use unless they pay.” This generally excludes anybody who is either unwilling or unable to pay. If exclusion is too costly for a business, however, and it is better to allow people who refuse to pay to enjoy the benefits of a good or a service, it is known as non-exclusion.
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