Why Are Private Firms Unable to Produce Public Goods

question 43

Multiple Choice

Why are private firms unable to produce public goods?

• A) Because the government outlaws private firms from producing them.
• B) The marginal cost of production is too high for private production to be possible.
• C) They can produce these goods, but they would not earn any revenue because of the free-rider problem.
• D) The tragedy of the commons means that private firms produce an inefficient amount of public goods.
• E) None of the above answers is correct.

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Definitions:

Good Night's Sleep

A state of rest where the body and mind recover, leading to improved mental and physical health.

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Refers to the physical substances from which things can be made, including any component used in the manufacture or construction of goods.

REM

Rapid Eye Movement, a phase of sleep characterized by fast and random movements of the eyes, often associated with vivid dreaming.

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Muscles that help maintain posture and balance, typically by resisting gravity.