National defense is provided by the government because
A)it is impossible for private markets to produce public goods.
B)products provided by the government are produced more efficiently.
C)free-riders make it difficult for private markets to supply the socially optimal quantity.
D)public goods increase government revenues.

Question

Quizplus · Accepted Answer

National defense is a public good, which means that individuals cannot be excluded from its benefits and everyone can benefit from it regardless of whether they pay for it or not. This creates a free-rider problem, meaning that individuals will have an incentive to let others pay for national defense while still enjoying its benefits. In order to overcome this problem and provide the socially optimal quantity of national defense, the government needs to step in and provide it. Private markets are not suited for producing public goods because they cannot charge individuals for their use, so public provision is necessary.

National Defense Is Provided by the Government Because