Markets work well for some goods but poorly for others. For which of the following goods would markets be expected to work poorly?
A) clean air
B) clean restaurants
C) clean movie theatres
D) all of the above

Question

Quizplus · Accepted Answer

Markets tend to work poorly for goods that are considered public goods, such as clean air, because they are difficult to exclude individuals from using and one person's use of the good does not reduce the amount available for others. This creates a free-rider problem where individuals may not be willing to pay for the good since they can benefit from it without contributing to its production. On the other hand, clean restaurants and movie theatres are considered private goods and markets can work well for these goods since they are easy to exclude non-paying individuals and their consumption by one person reduces the amount available for others.

Markets Work Well for Some Goods but Poorly for Others