In the absence of government
A) public goods are likely to be overprovided.
B) market failure is less likely to occur.
C) public goods are likely to be underprovided.
D) the free-rider problem is more likely to occur.

Question

Quizplus · Accepted Answer

In the absence of government, public goods are likely to be underprovided because there is no mechanism to enforce contributions from non-payers. This creates the free-rider problem where people will consume the public good without paying for it, leading to inadequate provision of the public good. Market failure is also more likely to occur when there is no government intervention to correct market inefficiencies.

In the Absence of Government