Economics 9708 · AS & A Level · Behavioural economics

Behavioural economics — practice question

Why do public goods count as an example of market failure?

  • AProducers undervalue the benefits of a public good.
  • BPublic goods have high fixed costs of production.
  • CThe non-excludability of a public good leads to the free rider problem.
  • DWhen a public good is consumed by one person, it is not available to others.

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