Why Is It Difficult for a Private Market to Provide

question 196

Multiple Choice

Why is it difficult for a private market to provide the economically efficient quantity of a public good?

• A)Because by law, governments cannot use cost-benefit analysis to determine this quantity
• B)Because individual preferences are not revealed on the market for the good
• C)Because public goods produce positive and negative externalities
• D)Because it is too expensive to produce the necessary amount of the good

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Definitions:

Optimal Solution

The best possible answer to a problem, given constraints and objectives, usually determined by mathematical models or algorithms.

Filled Cells

In manufacturing or production layouts, cells or units that are maximally utilized with machinery or equipment, optimizing space and workflow.

Stepping-stone Method

A procedure used in linear programming to find the optimal solution for transportation problems by iteratively improving the current solution.