Some markets fail to generate an optimal quantity of public goods because
A) free riders undermine the profitability of producing the goods
B) they are too expensive
C) they yield too few benefits
D) private enterprise cannot get access to the raw materials
E) there is insufficient demand for such goods

Question

Quizplus · Accepted Answer

Public goods are non-excludable and non-rivalrous, meaning they are available to all members of society without diminishing in quantity as more people consume them. This characteristic leads to the free-rider problem, where individuals can benefit from the good without contributing to its cost, undermining the incentive for private companies to produce it. This is a primary reason markets may fail to generate an optimal quantity of public goods.

Some Markets Fail to Generate an Optimal Quantity of Public