Governments provide public goods such as national defence because
A)governments are more efficient than private firms at producing public goods.
B)of the free-rider problem,which results in underproduction by private firms.
C)people do not value national defence very highly.
D)of the potential that private firms will make excess profit.
E)of external costs.

Question

Quizplus · Accepted Answer

The free-rider problem occurs when people can benefit from a public good without paying for it, which leads to underproduction by private firms. Therefore, it is the responsibility of the government to provide public goods such as national defence.

Governments Provide Public Goods Such as National Defence Because