When producers (say, of roads) are not able to make all consumers pay for enjoying their product (i.e., the roads), they tend to see a
A) marginal cost of production that is too low, and there is a supply-side market failure.
B) marginal benefit of production that is too high, and there is a demand-side market failure.
C) marginal cost of production that is too high, and there is a supply-side market failure.
D) marginal benefit of production that is too low, and there is a demand-side market failure.

Question

Quizplus · Accepted Answer

When producers cannot charge all consumers, the marginal benefit perceived is lower than the actual benefit, leading to underproduction and a demand-side market failure.

When Producers (Say, of Roads) Are Not Able to Make