A public good will:
A) be efficiently provided by the free market as long as its total benefits exceed its total costs.
B) be efficiently provided by the free market as long as its marginal benefits exceed its marginal costs.
C) be provided in less than efficient quantities by the free market.
D) be provided in efficient quantities by voluntary contributions.
E) not be provided by the government.

Question

Quizplus · Accepted Answer

Public goods are non-excludable and non-rivalrous, meaning that it is impossible to exclude individuals from using the good and one person's use of the good does not diminish the availability of it for others. Because of this, individuals have no incentive to pay for the good and it is unlikely to be provided efficiently by the free market. Therefore, option C is the best choice as it correctly states that public goods will be provided in less than efficient quantities by the free market.

A Public Good Will