Discussion
Assertion (A) : There is no incentive for a profit maximizing producer to supply the public goods.
Reason (R) : If he produces it he is unable to exclude people from consuming it and hence he cannot charge a price.
Codes :
Answer: D
Both statements are correct and (R) is the correct explanation of (A), which is the fourth option. A public good is non-excludable, so the producer cannot keep non-payers from consuming it and so cannot charge a price, and a profit maximizing firm therefore has no incentive to supply it. This is why the state provides such goods. The first, second and third options call one or both statements wrong, so they are rejected.
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