Suppose a public good that is worth $1 billion is not produced by the market, and so the government provides it, but at a cost of $3 billion. This attempt to correct a market failure has:
A. given rise to the problem of free riders.
B. resulted in an information asymmetry for the government.
C. been successful since the public good is now produced.
D. resulted in a government failure since use of resources is now less efficient.
Answer: D
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