Public goods are difficult for a private market to provide due to ?
Correct answer: D. The free-rider problem.
- A. the rivalness problem
- B. the public goods problem
- C. the Tragedy of the Commons.
- D. The free-rider problem.
Explanation
Public goods are non-excludable, so people can benefit without paying, creating the free-rider problem. Private firms then struggle to collect enough revenue to provide them profitably.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
1,742 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Microeconomics questions
A free rider is a person who ?
A positive externality affects market efficiency in a manner similar to a ?
A negative externality affect market efficiency in a manner similar to ?
A good produced by a natural monopoly is ?
A public good is ?
A person who regularly watches BBC television programs in the UK but fails to pay their TV licence fee is known as ?