The free-rider problem is the reason way private markets are ...

[waynest]

The free-rider problem is the reason way private markets are unlikely to achieve the efficient level of production of
 
  A) normal goods.
  B) excludable goods.
  C) public goods.
  D) private goods.

Question 2

What are the substitution effects that affect aggregate demand?
 
  What will be an ideal response?

[jordangronback]

Answer to Question 1

C

Answer to Question 2

There are two substitution effects that affect aggregate demand and help account for the negative slope of the AD curve. First, an increase in the price level raises the interest rate, which reduces the quantity of real GDP demanded. Second, an increase in the U.S. price level raises the price of U.S. goods relative to foreign goods which also decreases the quantity of U.S. real GDP demanded.