Individuals want nonexcludable public good X,but the market does not provide it because of the free rider problem.Government overcomes the free rider problem by ______________ individuals and then either producing good X itself or paying someone to produce it.

Question

Quizplus · Accepted Answer

The government overcomes the free rider problem by taxing individuals, which allows the government to fund the production of public good X either directly or through subsidies. By taxing individuals, everyone pays a share towards the production of the public good, which reduces the incentive to free ride.

Individuals Want Nonexcludable Public Good X,but the Market Does Not