For a nonexcludable good like national defense, the private market will lead to:
A)too much production of the good.
B)too much consumption of the good.
C)too little production of the good.
D)too little consumption of the good.

Question

Quizplus · Accepted Answer

Since national defense is nonexcludable, individuals cannot be excluded from consuming it even if they do not pay for it. Therefore, the private market may not produce enough of the good because there is no profit incentive for producers to provide it, leading to underproduction.

For a Nonexcludable Good Like National Defense, the Private Market