Markets work well for allocating _______ efficiently, but not always so well for allocating _______.
A)private goods; public goods
B)public goods; private goods
C)common resources; public goods
D)public goods; common resources

Question

Quizplus · Accepted Answer

Markets are effective at allocating private goods because these goods are excludable and rival in consumption, meaning that people can be prevented from using them if they do not pay, and one person's use diminishes another's ability to use the same good. However, markets struggle to allocate public goods efficiently because they are non-excludable and non-rivalrous, meaning they are available for everyone to use without diminishing others' ability to use them, leading to free-rider problems.

Markets Work Well for Allocating _______ Efficiently, but Not Always