It is difficult for a private market to provide the economically efficient quantity of a public good because
A)by law governments cannot use cost-benefit analysis to determine this quantity.
B)public goods produce positive and negative externalities.
C)individual preferences are not revealed in the market for the good.
D)it is too expensive to produce the necessary amount of the good.

Question

Quizplus · Accepted Answer

The economically efficient quantity of a public good is determined by individuals' marginal willingness to pay for the good. However, since preferences for public goods are not revealed in the market, the private market cannot determine the efficient quantity. As such, governments must intervene to ensure the provision of the optimal amount of public goods.

It Is Difficult for a Private Market to Provide the Economically