Final answer:
Goods that are non-rival, such as public goods, are inefficiently provided by the free market because they are subject to the free rider problem, leading to a situation where the marginal value exceeds what people pay.
Step-by-step explanation:
A good that is non-rival is provided ineffciently by the free market primarily because its nature leads to the free rider problem. Non-rivalry in the context of public goods means that the consumption of the good by one individual does not reduce availability for others. Because of this characteristic, free markets struggle to price and sell these goods, as it's difficult to exclude non-payers from their benefits.
Hence, the marginal value of the good exceeds what people are willing to pay directly, as many consumers would prefer to benefit without contributing financially, relying on others to pay for the provision of the good. This option is represented by choice b. 'the marginal value of the good exceeds people's contributions to the good'