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.
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.
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