Perfectly Competitive Markets Will Tend to Under-Allocate Resources to Nonexclusive

question 2

Multiple Choice

Perfectly competitive markets will tend to under-allocate resources to nonexclusive public goods because

• A)these goods are produced under conditions of increasing returns to scale.
• B)no single individual can appropriate the total benefits provided by the purchase of such goods.
• C)these goods are best produced under conditions of monopoly.
• D)no private producer can provide the capital necessary to produce such goods.

---

Definitions:

Social Influence

The effect that individuals or groups can have on the beliefs, feelings, and actions of others, leading to changes in attitudes or behaviors.

Asch's Experiments

Studies conducted by Solomon Asch that demonstrated the power of conformity in groups, where individuals often go along with a group's consensus even when it is clearly incorrect.

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or societal standards.

Ostracized

The act of excluding or ignoring someone from a social group, leading to feelings of isolation for the individual concerned.