Competitive markets will generally produce
A) too much of a public good.
B) too little of a public good.
C) the efficient amount of a public good.
D) the efficient amount of a public good in the short run, but not in the long run.

Question

Quizplus · Accepted Answer

Competitive markets tend to underproduce public goods because these goods are non-excludable and non-rivalrous, leading to the free-rider problem where individuals have little incentive to pay for the good, resulting in less than the efficient amount being produced.

Competitive Markets Will Generally Produce