Answer to Question #218908 in Microeconomics for CHIPMAN

Question

The market is unable to provide national defence efficiently.” Discuss this statement critically.

Answer 1

The market cannot control the consumption of public goods because some consumers may choose not to pay for their consumption. Here national defense is not provided because each citizen receives similar benefits regardless of how much they pay. The market is also unable to control the manufacture and sale of goods with less merit than consumers perceive, for example, cigarettes.