Which of the following statements is (are) TRUE?
I. Public goods tend to be underprovided.
II. One person's consumption of a public good diminishes its use to another person.
III. The marginal cost of providing a public good to another consumer is infinite.
A) I and III
B) II and III
C) I
D) I, II, and III

Question

Quizplus · Accepted Answer

I. Public goods tend to be underprovided due to the free-rider problem, where individuals can benefit from the good without contributing to its cost. II is false because public goods are non-rivalrous, meaning one person's consumption does not diminish its availability to others. III is false because the marginal cost of providing a public good to an additional consumer is often very low or zero, not infinite.

Which of the Following Statements Is (Are) TRUE