For which of the following goods, can markets not be efficient?
Explanation:
The fourth line of the passage states explicitly that, “markets fail for pure public goods”. Based on the “Note” provided below the passage, it can be inferred that option 3 is a public good, while options 1, 2 and 4 are private goods. Thus, it can be safely concluded that a market for option 3 “air” would not be efficient. Hence, the correct answer is option 3.
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