For a nonexcludable good like national defense,the private market will lead to _____ of the good.
A)too much production
B)too much consumption
C)too little production
D)the efficient level of consumption

Question

Quizplus · Accepted Answer

Since national defense is nonexcludable, people cannot be excluded from benefiting from it regardless of whether they pay for it or not. Therefore, the private market will not produce enough of it because individuals will not be willing to pay for it, leading to too little production. This is a classic example of market failure, and a government intervention is necessary to ensure the efficient level of provision.

For a Nonexcludable Good Like National Defense,the Private Market Will