Question

Because of the free-rider problem:

the market demand for a public good is nonexistent or understated.

government has increasingly yielded to the private sector in producing public goods.

the market demand for a public good is overstated.

public goods often create serious negative externalities.

Answer 1

Ans.
Correct answer is option D.

Because of the free-rider problem: public goods often create serious negative externalities.
This happens when individuals can profit by a good/service without paying anything towards it. T
he free-rider issue is basic with public goods – goods with non-excludable advantages,
for example on the off chance that you decrease contamination, everybody in the public arena will profit. ... When contamination is decreased – everybody needs to profit.