Which of the following describes the tendency of governments to under provide or over provide goods and services?

A. The free rider program

B. Negative externalities

C. Government failure

D. Market failure

The answer is C. Government failure.

• This is because when a Government decides to intervene in a market (i.e. by providing goods and services on its own or through regulations) and there are either too many or too little goods and services provided, it cannot be a market failure since the market failure is based on the mechanisms of a free market (i.e. without government intervention). Negative externalities do not apply since they are external forces (e.g. the environment) while the free rider program is not relevant since an under provision of goods implies that there is no free riding.