Markets may have difficulty providing the proper quantity of a public good because individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good. the good generally has a very large value to consumers relative to its cost of production. the good is one that tends to benefit a large number of people. the large profit involved in the production of a public good is generally too much for private firms to effectively pay out to shareholders.
Markets may have difficulty providing the proper quantity of a public good because individuals will tend to become free riders, and private firms will have difficulty generating enough revenue to produce an efficient quantity of the good. the good generally has a very large value to consumers relative to its cost of production. the good is one that tends to benefit a large number of people. the large profit involved in the production of a public good is generally too much for private firms to effectively pay out to shareholders.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Markets may have difficulty providing the proper quantity of a public good because
individuals will tend to become free riders, and private firms will have difficulty generating enough revenue
to produce an efficient quantity of the good.
the good generally has a very large value to consumers relative to its cost of production.
the good is one that tends to benefit a large number of people.
the large profit involved in the production of a public good is generally too much for private firms to
effectively pay out to shareholders.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F622aed2c-66db-4810-a472-c3deff76917f%2F9053ad18-6d63-4d75-bc43-18e5e23fd305%2F64yrzo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Markets may have difficulty providing the proper quantity of a public good because
individuals will tend to become free riders, and private firms will have difficulty generating enough revenue
to produce an efficient quantity of the good.
the good generally has a very large value to consumers relative to its cost of production.
the good is one that tends to benefit a large number of people.
the large profit involved in the production of a public good is generally too much for private firms to
effectively pay out to shareholders.
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