Because the benefit each citizen receives from having an educated community is a public good:
A)the free-rider problem causes the private market to undersupply education to the community
B)the government can potentially help the market reach a socially optimal level of education
C)a tax increase to pay for education could potentially make the community better off
D)all of the above are true

Question

Quizplus · Accepted Answer

The free-rider problem is a phenomenon where individuals can benefit from a good without paying for it, leading to underproduction by the private market. In the case of education, this is particularly relevant because an educated community benefits everyone regardless of whether they personally paid for education or not. The government can potentially address this market failure by providing education as a public good or by subsidizing education to encourage private investment. A tax increase to pay for education could potentially make the community better off by improving the overall education level and increasing human capital, which leads to economic growth and social benefits.

Because the Benefit Each Citizen Receives from Having an Educated