Why Will a Private Market Be Unable to Produce the Efficient

question 51

Multiple Choice

Why will a private market be unable to produce the efficient quantity of public goods?

• A) because the good's marginal cost is too low
• B) because the good is nonexcludable, so there is the free rider problem
• C) because the good is rival, so no one will want to pay the producer for it
• D) All of the above answers are correct.

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Definitions:

Incremental Analysis

A decision-making process used to evaluate the financial impacts of different choices, focusing on the costs and benefits that change between alternatives.

Special Price

A discounted or promotional pricing strategy applied to a product or service for a limited time or specific customers.

Variable Costs

Costs that vary directly with the level of production or business activity, such as raw materials and labor.

Fixed Costs

Expenses that remain constant in total regardless of changes in the level of business activity or output.