If a pure public good is produced in a competitive market, then:
A)too much or too little of the good will be produced.
B)too little of the good will be produced.
C)the socially optimal amount of the good is produced.
D)too much of the good will be produced.

Question

Quizplus · Accepted Answer

In a competitive market, producers will only produce goods that they can sell at a profit. Since pure public goods are non-excludable and non-rivalrous, it is difficult for producers to charge a price for the good and earn a profit. Therefore, they will under-produce the good or refrain from producing it altogether. This leads to too little of the good being produced in a competitive market.

If a Pure Public Good Is Produced in a Competitive