An important difference between the demand for a private good and the demand for a public good is that
A)individuals reveal their preferences for a public good but they do not have to reveal their preferences a private good.
B)the resources used to provide public goods are common resources or government owned; the resources used to produce private goods are all privately owned.
C)individuals reveal their preferences for a private good but they do not have to reveal their preferences for a public good.
D)the demand for a private good produces consumption externalities; the demand for a public good produces production externalities.

Question

Quizplus · Accepted Answer

For private goods, individuals reveal their preferences through their purchasing decisions. For public goods, preferences are not revealed in the same way because they are non-excludable and non-rivalrous, leading to the free-rider problem.

An Important Difference Between the Demand for a Private Good