Why isn't national defense provided by free markets?
What will be an ideal response?
National defense is a public good. This fact means that it is hard to exclude anyone from consuming the benefits of national defense. If left to the free market, it would be very difficult for private companies to charge people for protection. People would be unwilling to pay for the service because they can get it without paying. The free-rider problem would make the ability to earn a profit a difficult or impossible prospect and hence little or no defense would be provided.
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Refer to the table above. What is the total cost incurred per month if Ryan rents Apartment 3?
A) $2,000 B) $2,050 C) $2,150 D) $2,270
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.