A producer cannot at low cost exclude people from the benefits of

Question

Quizplus · Accepted Answer

National defense is a public good, which means that it is non-excludable and non-rivalrous. It is non-excludable because it is difficult to exclude anyone from receiving the benefits of national defense once it is provided, regardless of whether they pay for it or not. It is also non-rivalrous because the benefits of national defense can be enjoyed by everyone without reducing the enjoyment by others. This makes it inefficient for private producers to provide national defense because they cannot charge all those who benefit from it, leading to underproduction of the good.

A Producer Cannot at Low Cost Exclude People from the Benefits