The government's provision of nonexcludable public goods such as national defense is accepted because
A)government is more efficient than private firms at producing goods.
B)the market fails to produce nonexcludable public goods as a result of the free-rider problem.
C)people do not value public goods such as national defense very highly.
D)these goods always create negative externalities.

Question

Quizplus · Accepted Answer

The market fails to produce nonexcludable public goods as a result of the free-rider problem. This means that people benefit from these goods without paying for them, which leads to underproduction by the market. The government provides these goods to ensure that they are provided at the optimal level.

The Government's Provision of Nonexcludable Public Goods Such as National