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Why would it be inefficient for the government to charge a price for consuming a public good such as national defence?

User Aldous
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1 Answer

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Final answer:

The inefficiency in charging for a public good like national defense stems from its nonexcludable and non-rivalrous nature, leading to the free rider problem and potential undersupply of the good if left to the private market.

Step-by-step explanation:

It would be inefficient for the government to charge a price for consuming a public good such as national defense because it is a nonexcludable good, meaning it cannot be feasibly restricted only to individuals who pay for it. Additionally, public goods exhibit non-rivalrous characteristics, where one person's consumption does not diminish the ability of others to consume the same good. Due to these attributes, if national defense were privately funded, the free rider problem would arise, with individuals benefiting without paying, leading to an undersupply of the good. Therefore, public goods like national defense are typically provided by governments and funded through taxation, allowing for universal provision and avoiding the market failures associated with private provision.

User Jeff Bezos
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