Asked by Brooke Patterson on Apr 29, 2024
Verified
Public goods represent ________ because by their very nature they are nonexcludable and nonrival which makes it difficult for the private sector to supply them profitably.
A) a positive externality
B) a negative externality
C) a market failure
D) efficient production
Market Failure
A situation in which the allocation of goods and services by a free market is not efficient, leading to a loss of economic value.
Public Goods
Goods that are non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.
Nonexcludable
A characteristic of a public good where no one can be prevented from using it.
- Determine and clarify the economic shortcomings concerning public goods, especially the challenge posed by free riders.
- Identify the circumstances in which the distribution of public goods is most effective, including the government's function.
Verified Answer
EO
Elora O'NeilApr 29, 2024
Final Answer :
C
Explanation :
Public goods are considered a market failure because their nonexcludable and nonrival characteristics prevent the private sector from supplying them profitably, leading to underproduction or no production without government intervention.
Learning Objectives
- Determine and clarify the economic shortcomings concerning public goods, especially the challenge posed by free riders.
- Identify the circumstances in which the distribution of public goods is most effective, including the government's function.