Chapter 14R, Problem 11MCQ

To determine

The correct option for goods provided by markets

Answer to Problem 11MCQ

From the available options, the correct option is public goods are likely to suffer from inefficiently low production.

Explanation of Solution

The goods which are provided by the market mainly involve public goods such as mail, schools, etc. and the services or goods belonging to the public sector cannot be prevented against the largest consumption which means there can be low production. As the price of private goods can be high which cannot lead to overuse and artificially scarce goods are excludable. And, common resources are consumed as per the requirement.

Therefore, all options: a, b, c, and e are incorrect.

Here, the correct option is d (public goods are likely to suffer from inefficiently low production).

Economics Concept Introduction

Introduction: Excludable refers to the situation when according to people's willingness to pay, producers can prevent certain people from using or consuming goods and services. And, a rival in consumption means if one person consumes a good or service then it reduces the number of available goods and services for consumption by another.

Public goods covers are both non-excludable as well as non-rival.

And, a private good is excludable and rival in consumption which may prevent people from consuming when one person consumes the same good.