Why will a private market be unable to produce the efficient quantity of public goods?
A) Because the good is nonexcludable, so there is the free- rider problem.
B) Because the good's marginal cost is too low.
C) Because the good is rival, so no one will want to pay the producer for it.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

Public goods are characterized by being non-excludable and non-rivalrous, which leads to the free-rider problem. This means individuals cannot be effectively excluded from using them, and one person's use does not reduce availability to others. Consequently, private markets struggle to produce these goods efficiently because they cannot easily charge users, leading to underproduction as they cannot cover their costs or earn a profit.

Why Will a Private Market Be Unable to Produce the Efficient