Due to the externalities associated with public goods and common resources:
A)private markets will lead to an efficient allocation of resources
B)government intervention can potentially raise economic wellbeing
C)private markets will correct for the gain or loss to consumer surplus
D)all of the above are true

Question

Quizplus · Accepted Answer

Public goods and common resources are characterized by a market failure known as the tragedy of the commons, where no one has ownership or control over these resources, resulting in overuse and depletion. Private markets are not equipped to handle this problem and will often lead to an inefficient allocation of resources. Government intervention, through measures such as regulation or taxation, can correct this market failure and potentially raise economic wellbeing. Therefore, only choice B is correct.

Due to the Externalities Associated with Public Goods and Common