Because of the free-rider problem,
A) the market demand for a public good is overstated.
B) the market demand for a public good is nonexistent or understated.
C) government has increasingly yielded to the private sector in producing public goods.
D) public goods often create serious negative externalities.

Question

Quizplus · Accepted Answer

The free-rider problem occurs when individuals can benefit from a public good without paying for it. As a result, the market demand for a public good is either nonexistent or understated because individuals will not willingly pay for something they can receive for free. Therefore, the government often intervenes to provide public goods that the private sector would not supply efficiently.

Because of the Free-Rider Problem