Why do markets tend to underproduce public goods?
Markets, left to themselves, tend to underproduce public goods for one reason. It is difficult or impossible to exclude persons from the good or service. If it were possible to exclude, then a price could be charged which might cover the cost of the good or service. Without a profit motive to acquire the good, markets don't do so.
You might also like to view...
A contractionary monetary policy causes
A) higher interest rates, which increases the foreign demand for U.S. financial instruments, which causes interest rates to decrease. There is no effect on net exports. B) higher interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports. C) higher interest rates, which increases the international price of the dollar and decreases net exports. D) lower interest rates, which decreases the foreign demand for U.S. financial instruments, raising the international price of the dollar and increasing net exports.
Refer to Figure 9.6. The amount the government pays in the market to implement this policy is
A) $20. B) $3000. C) $4000. D) $6000. E) $12,000.
Any movement to reduce the globalization of the world's economies will make workers in the poorest countries worse off than they would otherwise be
a. True b. False Indicate whether the statement is true or false
A nonmonetary opportunity cost is called a(n) ________, while a cost that involves spending money is called a(n) ________.
A) implicit cost; explicit cost B) normal rate of return; asset C) accounting profit; economic profit D) accounting cost; explicit cost