When what people pay does not necessarily reflect the real value they put on a good,it is likely that the:
A) free rider problem does not exist.
B) good will be undersupplied.
C) good is easily excludable.
D) not a socially desirable good.

Question

Quizplus · Accepted Answer

When people do not pay the real value they put on a good, it is likely that the good will be undersupplied because the producers will not have the incentive to produce more of it, since they do not receive the full value of the good. This is known as the market failure problem of underprovision of public goods. The other options are less likely/the opposite of what typically happens in this scenario.

When What People Pay Does Not Necessarily Reflect the Real