Which of the following best explains why the characteristic of non-excludability in public goods leads to market failure?
It prevents the price mechanism from functioning because consumers can benefit without paying, resulting in the free-rider problem and a missing market.
It means the marginal cost of providing the good to an additional consumer is zero (MC=0MC = 0MC=0), making any positive price allocatively inefficient.
It causes asymmetric information where sellers possess more information than buyers, leading to adverse selection and market collapse.
It results in a negative externality in consumption where the marginal social benefit (MSBMSBMSB) is less than the marginal private benefit (MPBMPBMPB).
