For nonrival goods like pay-per-view television programmes,the private market will lead to _____ from a social perspective.
A) production of too much of the good
B) consumption of too much of the good
C) consumption of too little of the good
D) outsourcing its production

Question

Quizplus · Accepted Answer

Nonrival goods are those goods which can be consumed by multiple individuals at the same time without diminishing their availability for others. Since pay-per-view television programmes fall under this category, the private market may lead to underproduction from a social perspective as private firms may not take into account the positive externalities associated with the consumption of such nonrival goods. This can lead to a situation where individuals consume too little of the good since the private market may only produce the optimal quantity to maximize their own profits but not the quantity that would maximize the overall welfare of society.

For Nonrival Goods Like Pay-Per-View Television Programmes,the Private Market Will