The market system does not produce public goods because
A)there is no need or demand for such goods.
B)private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.
C)public enterprises can produce such goods at lower cost than can private enterprises.
D)their production seriously distorts the distribution of income.

Question

Quizplus · Accepted Answer

Private firms face a challenge with public goods because they cannot easily exclude non-paying consumers from benefiting, leading to a situation where the good may be underproduced or not produced at all if left to the market. This is known as the free-rider problem.

The Market System Does Not Produce Public Goods Because