Public goods are goods that we all agree are useful and therefore are all willing to pay for. This implies that there is no efficiency problem in the production of public goods.

Question

Quizplus · Accepted Answer

Public goods are characterized by non-excludability and non-rivalry, meaning they can be consumed by anyone without reducing their availability to others, and it's difficult to exclude non-payers. This often leads to an efficiency problem known as the "free rider" problem, where individuals may benefit from the good without contributing to its cost, potentially resulting in underproduction of the good.

Public Goods Are Goods That We All Agree Are Useful