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Homework answers / question archive / The free-rider problem makes the private provision of a public good inefficient because A
The free-rider problem makes the private provision of a public good inefficient because A. firms will overcharge the government for production B. no one will pay for the public good and the firm will make zero revenue C. the firm has an incentive to overproduce D. government will not allow private production of public goods Click to select your answer and then click Check Answer.
Correct choice is option B
The problem with private provision of public good is that private entity will attempt to charge each and every user a price. however in case of public good we know that there is non rivalry and non excludability due to which each and every consumer attempts to freeride, that is, expects that others will pay. When no one pays the private provision becomes impossible.
