The Efficient Quantity of a Public Good Can't Be Produced

question 39

Multiple Choice

The efficient quantity of a public good can't be produced by private firms because

• A) only the government has the necessary resources.
• B) consumers have an incentive to free ride and not pay for their share of the good.
• C) the price would be too high if private firms produced the goods.
• D) private firms aren't large enough.
• E) it is impossible to determine the efficient amount.

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Definitions:

Rate Of Return

The earning or losing of funds on an investment throughout a defined timeframe, detailed as a percentage of the original amount invested.

Profits

The financial gain made in a transaction or operation, calculated as the difference between revenue and costs.

Compounded Annually

This refers to the process where interest is added to the principal sum, so that from that moment on, the interest that has been added also earns interest, being calculated and added to the account annually.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, without compounding over time.