Some public goods would not be provided without government intervention because the marginal cost of the good:
A)exceeds an individual's marginal benefit.
B)is less than an individual's marginal benefit.
C)would equal an individual's marginal benefit.
D)would need to be maximized.

Question

Quizplus · Accepted Answer

Public goods have the characteristics of non-excludability and non-rivalry in consumption which means that once it is provided, everyone can benefit from it and one person’s consumption does not reduce the amount of the good available to others. This makes it difficult for private markets to provide these goods because there is no incentive for individuals to pay for a good that they can obtain for free. The marginal cost of the good is the cost of producing one additional unit of the good, and if it exceeds an individual’s marginal benefit, then they will not be willing to pay for it. Therefore, government intervention is necessary to ensure that these goods are provided since they benefit society as a whole, but would not be produced by private markets alone.

Some Public Goods Would Not Be Provided Without Government Intervention