The efficient quantity of a public good can't be produced by private firms because
A) only the government has the necessary resources.
B) consumers have an incentive to free ride and not pay for their share of the good.
C) the price would be too high if private firms produced the goods.
D) private firms aren't large enough.
E) it is impossible to determine the efficient amount.

Question

Quizplus · Accepted Answer

The efficient quantity of a public good is the quantity where the marginal social benefit equals the marginal social cost, which cannot be achieved through private production because consumers have an incentive to free ride and not pay for their share of the good.

The Efficient Quantity of a Public Good Can't Be Produced