Respond to a classmate with substantive comments

Reference no: EM132473384

Part One

While in most circumstances the market is an efficient way to allocate goods and services, it may sometimes fail. When we use the term "market failure," we are not referring the market failing to reach its equilibrium but rather the equilibrium that it reaches fails to be the optimal outcome from society's perspective. The book refers to four sources of market failure. For this discussion you will focus on public goods as a source of market failure.

Explain what determines the "optimal" amount of a public good and how this concept of optimality can change over time (as we elect new and different leaders). If you use any other sources, be sure to cite them within the text as well as provide a bibliographical citation at the end.
Watch the video on a common illustration of public goods: A Deeper Look at Public Goods
Provide one "unique" (i.e. don't use one that a classmate has already used!) example of the free rider problem that you have seen in your lives. From this example, identify what is causing the market failure and a possible way to solve this problem.

Part Two

Respond to a classmate with substantive comments. Please note that you will not be able to respond to your classmates until you post an original thread for part one.

Reference no: EM132473384

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