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Homework answers / question archive / Because national defense is potentially subject to free riding, a private sector market for national defense would lead to: a) The efficient amount of national defense if there is free-riding, b) More than the efficient amount being produced if there is free-riding, c) Less than the efficient amount being produced if there is free-riding, d) Less than the efficient amount being produced if is not free-riding, e) None of these
Because national defense is potentially subject to free riding, a private sector market for national defense would lead to:
a) The efficient amount of national defense if there is free-riding,
b) More than the efficient amount being produced if there is free-riding,
c) Less than the efficient amount being produced if there is free-riding,
d) Less than the efficient amount being produced if is not free-riding,
e) None of these.
In every nation, national defense is considered a pure public good as it is both non-excludable and non-rival. Hence, there exists a free-rider problem; however, if it becomes privatize (chargeable), then all the citizens will not pay for it. Thus, it will reduce the amount of national defense below the efficient level when there exist free-riding.
