Public goods are not sold in efficient quantities in the marketplace because:
A) once supplied to a buyer, they are made available at no cost to someone else.
B) the more one person has, the less another person has.
C) they are usually so costly that only the wealthy can afford them.
D) of none of the above.

Question

Quizplus · Accepted Answer

Public goods are non-excludable, meaning that once they are provided to one person, others cannot be easily excluded from benefiting from them. This creates a free-rider problem, where individuals have an incentive to let others pay for the good while still enjoying its benefits for free. This leads to underproduction of public goods in the marketplace, as private firms are unwilling to produce goods that they cannot charge a price for.

Public Goods Are Not Sold in Efficient Quantities in the Marketplace