Why Will For-Profit Producers Not Produce Public Goods

question 2

Multiple Choice

Why will for-profit producers not produce public goods?

• A)Markets exist for private goods but not for public goods.
• B)The cost of production can be easily determined.
• C)Buyers will not be willing to pay for the goods since the benefits are not excludable.
• D)All external benefits can be internalised using market prices.

---

Definitions:

Unsystematic Risk

The risk associated with a specific company or industry that can be mitigated through diversification.

Residuals

Residuals are differences between observed and predicted values in statistical models, used to assess the fit of models to data.

Market Portfolio

A theoretical portfolio consisting of all assets available in the market, weighted by their market capitalization.

Efficient Frontier

A set of optimal portfolios offering the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.