Question

1. Why are markets an inefficient way to supply public goods? Explain fully. a.Why are markets an inefficient way to manage common resources? Explain fully.

Answer 1

Public goods generally cause market failure because such goods are demanded by people however firms dont find jt profitable to produce and sell these goods because of free nature and will be unable to prevent this further making it ineffective

Common resources like water are ineffective to manage as these cannot be measured on per capita basis and cap on usage of these resources per individuals cannot be implemented. Since they are readily available there tends to be wastage and misuse and its inefficiency in allocation and traceability making them ineffective.