When a good is characterised by non-excludability, it is theoretically possible for the government to:
A)increase the wellbeing of residents by raising taxes to provide the good
B)eliminate the free-rider problem
C)reach the efficient outcome in spite of private market failure to do so
D)do all of the above

Question

Quizplus · Accepted Answer

When a good is characterised by non-excludability, it means that it is difficult or impossible to exclude individuals from enjoying the benefit of the good, even if they do not contribute towards its provision. This can lead to the free-rider problem, where people have an incentive to not contribute towards its provision as they can still access the benefits. 
In such a scenario, the government can increase the wellbeing of residents by raising taxes to provide the good, which would be beneficial to all members of society, including those who would not have been willing to contribute towards it voluntarily. 
The government can also eliminate the free-rider problem by providing the good itself or by regulating its provision. This would ensure that all members of society are contributing towards its provision and benefiting from it. 
Finally, the government can achieve the efficient outcome in spite of private market failure to do so by providing the good in a way that accounts for the external benefits to society that are not accounted for by the private market. 
Therefore, all of the above choices are correct.

When a Good Is Characterised by Non-Excludability, It Is Theoretically