Question

Which statement is generally TRUE? Private markets overprovide public goods. Private markets underprovide public goods. Private markets provide the socially optimal amount of public good. Public goods must be priced at more than twice their price in the private market in order to provide the socially optimal amount.

Answer 1

Answer:

The correct statement is that the private markets underprovide the public goods

Explanation:

Public goods are those goods or products, which is consumed by individual without reducing the availability to others and these goods cannot be deprived. Its example are public parks, sewer systems.

Private markets are those markets which take the goods through government in order to sell the goods to consumers in the market and the private owners also produce their goods and sold them too in order to earn profit.

So, the statement which is correct that the private markets underprovide the public goods as they often sell the goods of their own manufactured goods.