How do public goods differ from private goods?

Public goods are characterized by their non-excludable and non-rivalrous nature, which means that once they are provided, they are available for everyone to use, and one person's consumption does not diminish the ability of another person to consume them. This is why the correct answer highlights that public goods can be consumed by anyone without reducing their availability.

For instance, consider a lighthouse or national defense. When a lighthouse emits light to warn ships of danger, all ships nearby benefit from the light regardless of how many ships are present. One ship using the light does not prevent another ship from using it as well. This fundamental quality distinguishes public goods from private goods, which are both excludable and rivalrous; when one person consumes a private good, it diminishes the availability of that good for others, as seen with food products or clothing.

Understanding this distinction is crucial as it explains the necessity for government intervention in providing public goods, since private markets may not supply them efficiently due to the difficulty in charging individuals for use.