Challenges in Funding Public Goods Voluntarily

Answered using GPT-4o mini by AI Answer Generator

Question:

It is difficult to get people to pay for public goods voluntarily because these goods are:

excludable, and therefore markets tend to overprovide them.

nonexcludable, and therefore markets tend to overprovide them.

excludable, and therefore markets tend to underprovide them.

nonexcludable, and therefore markets tend to underprovide them.

Answer:

It is difficult to get people to pay for public goods voluntarily because these goods are nonexcludable, and therefore markets tend to underprovide them.

Public goods are characterized by being nonexcludable (meaning that individuals cannot be effectively excluded from using them) and nonrivalrous (meaning that one person's use does not reduce availability for others). Because individuals can benefit from these goods without paying for them, there is little incentive for them to contribute to their provision, leading to underprovision in a free market.