In the absence of government intervention
A)free-rider problems are less likely to occur.
B)market failure is less likely to occur.
C)public goods are likely to be over-provided.
D)public goods are likely to be under-provided.

Question

Quizplus · Accepted Answer

Public goods are goods and services that are non-excludable and non-rival in consumption, meaning that one person's consumption of the good does not reduce the amount available for others, and it is difficult or impossible to exclude anyone from using the good. In the absence of government intervention, private firms have no incentive to provide public goods because they cannot charge consumers for their use, leading to an under-provision of public goods. Without government intervention, public goods would not be efficiently allocated, and the market would fail to provide the socially optimal level of these goods.

In the Absence of Government Intervention