Compared to private goods, the free market would ________ public goods.

Question

Quizplus · Accepted Answer

Public goods have two characteristics: non-excludability and non-rivalry. Non-excludability means that it is impossible to exclude people from consuming the good even if they do not pay for it. Non-rivalry means that the consumption of the good by one person does not reduce the availability of the good for others. Because private firms cannot charge people for the use of public goods, they will underproduce them unless the government steps in to provide them. Therefore, the free market would underproduce public goods.

Compared to Private Goods, the Free Market Would ________ Public