3. Public goods are troublesome for the market to handle because nonpaying customers cannot easily be excluded.

Question:

3. Public goods are troublesome for the market to handle because nonpaying customers cannot easily be excluded. Since the amount of a public good that each individual receives is largely unaffected by whether he helps pay for it, most individuals will contribute little. Thus, the market will tend to undersupply public goods.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Economics Private And Public Choice

ISBN: 9780123110404

2nd Edition

Authors: James D Gwartney; Richard Stroup; A H Studenmund

Question Posted: