Why do market failures arise in case of public goods

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1. When negative externalities exist in production, _____.

    a.    the social supply curve lies to the left of the private supply curve

    b.    the social supply curve lies to the right of the private supply curve

    c.    the social supply curve is identical to the private supply curve

    d.    the private demand curve lies to the right of the social demand curve

    e.    the private demand curve lies to the left of the social demand curve

2. Why do market failures arise in case of public goods?

    a.    The quantity produced is much more than is actually required by the people.

    b.    The quality of these goods is not good enough.

    c.    The quantity produced is too less from the society’s point of view.

    d.    The government wastes a lot of resources for producing a public good.

    e.    The users of such goods are required to pay a high price for these goods.

Reference no: EM131388360

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