Left to their own,private markets tend to
A) underallocate resources to public goods.
B) allocate the economically efficient amount of resources to public goods.
C) overallocate resources to public goods.
D) use up all the public goods.

Question

Quizplus · Accepted Answer

Private markets tend to underallocate resources to public goods because they are non-excludable (people cannot be prevented from using them) and non-rivalrous (one person's use does not decrease the amount available to others), so there is little incentive for individuals or businesses to invest in their production or maintenance. As a result, public goods are often underprovided in the absence of government intervention or other forms of collective action.

Left to Their Own,private Markets Tend to