The whole class of goods that will be under produced or not produced at all in a completely unregulated market economy are referred to as ?
Correct answer: B. public goods
- A. Pareto goods
- B. public goods
- C. private goods
- D. free goods
Explanation
Public goods are underprovided by unregulated markets because people can benefit without paying, creating the free-rider problem. Their non-excludability makes private firms unable to capture enough revenue to supply them adequately.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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