The market system fails to provide the efficient output of public goods because:
A)people do not value public goods.
B)private firms cannot restrict the benefits from those goods to consumers who pay for them.
C)public enterprises can produce those goods at a lower cost than private firms.
D)public goods create widespread spillover costs.
E)public goods generate positive externalities and markets tend to underproduce such goods.

Question

Quizplus · Accepted Answer

Private firms cannot restrict the benefits of public goods to only those who pay for them, leading to the free-rider problem, which results in underproduction.

The Market System Fails to Provide the Efficient Output of Public