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    Question

    The government provides public goods

    because
    A private markets are incapable of producing these types of goods Correct Answer Incorrect Answer
    B free-riders make it difficult for private markets to supply the socially optimal quantity Correct Answer Incorrect Answer
    C markets are always better off with some government oversight Correct Answer Incorrect Answer
    D external benefits will accrue to private producers Correct Answer Incorrect Answer

    Solution

    Free-riders make it difficult for private markets to supply the socially optimal quantity so government provides the public goods.

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