Markets May Have Difficulty Providing the Proper Quantity of a Public

question 14

Multiple Choice

Markets may have difficulty providing the proper quantity of a public good because

• A) individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good.
• B) the good generally has a very large value to consumers relative to its cost of production.
• C) the good is one that tends to benefit a large number of people.
• D) the large profit involved in the production of a public good is generally too much for private firms to effectively pay out to shareholders.

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Definitions:

Assets

Resources owned by a company that have economic value and can be converted into cash.

Millions

A numerical unit equal to 1,000,000 or 10^6, often used in accounting and financial reporting to denote large values.

Cash Flow

The net amount of cash being transferred into and out of a business, reflecting the company's liquidity and overall financial health.

Stockholders

Individuals or entities that own shares in a corporation, thereby holding ownership interest in the company.