Private markets will not provide the efficient quantity of a public good because
A) of the principle of minimum differentiation.
B) public goods are rival and excludable.
C) of rational ignorance.
D) of the free-rider problem.

Question

Quizplus · Accepted Answer

Private markets will tend to underprovide public goods because individuals have an incentive to free-ride, meaning they consume the public good without paying for it. This results in private suppliers not being able to recover the full cost of producing a public good and therefore providing less than the socially optimal quantity.

Private Markets Will Not Provide the Efficient Quantity of a Public