For a nonexcludable good like national defence,the private market will lead to _____ of the good.
A) too much production
B) too much consumption
C) too little production
D) the efficient level of consumption

Question

Quizplus · Accepted Answer

Since the good is nonexcludable, individuals cannot be prevented from benefiting from it even if they do not contribute towards its production. Therefore, the market forces of supply and demand cannot operate efficiently to produce the socially optimal level of the good. In the absence of government intervention or provision, the private market will under-produce the good, resulting in too little production.

For a Nonexcludable Good Like National Defence,the Private Market Will