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Why is the government the only one in the economy that can provide public goods?
Wiki User
∙ 12y ago
They're not the only one that can, but a firm won't because it is not efficient for them to provide a public good. Public goods are attached to a free-rider problem, in which agent's (actors) in the economy do not want to pay for the good because it will be available to them regardless of their contribution. Remember, two aspects of public goods is their non-excludability, which means that no one is blocked from using them and public goods are non-rival, which means one person's enjoyment of them does not inhibit another's use.
A firm, wishing only to maximize profits will not produce public goods, because a public good's optimal production lies at a point which would cause the firm to incur loss. This is the main idea, for a technical proof of this, an understanding of marginal rates of substitution and deriving optimal first order conditions are needed, however to understand the intuition, or idea behind it, is enough.
Wiki User
∙ 12y ago
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A government that operates a market economy MIGHT become involved in the economy?
to provide public goods and services to its citizens.
The government needs to provide to provide public goods for what reason?
private companies can not benefit by providing them
What part of the economy finances public goods?
The public sector is the part of the economy that finances public goods.
When might it be desirable for a government to act as producer of goods and services with regards to economics?
Discussion of areas of market failure. This will be expressed in general terms - syllabus mentions the government as a producer of goods and services but does not deal with public and merit goods.
Match each role with the action performed by people playing that role.?
consumer-provide labor and investment producer-provide individual goods government-provide public goods
A government that operates a market economy MIGHT become involved in the economy?
to provide public goods and services to its citizens.
Can the market provide a public good on its own?
can the market provide a public goods on its own? government policies about public goods?
The government needs to provide to provide public goods for what reason?
private companies can not benefit by providing them
What part of the economy finances public goods?
The public sector is the part of the economy that finances public goods.
When might it be desirable for a government to act as producer of goods and services with regards to economics?
Discussion of areas of market failure. This will be expressed in general terms - syllabus mentions the government as a producer of goods and services but does not deal with public and merit goods.
What are public sectors?
These are the organisations where everything is owned and controlled by the government (or local government). These don't produce anything instead provide services. there are some goods like merit goods and public goods which are better provided in public sector.
What are the public sectors?
These are the organisations where everything is owned and controlled by the government (or local government). These don't produce anything instead provide services. there are some goods like merit goods and public goods which are better provided in public sector.
Match each role with the action performed by people playing that role.?
consumer-provide labor and investment producer-provide individual goods government-provide public goods
How do government play a role in a economic flow?
They use taxes to provide public goods and services.
Why do public goods demonstrate the limitations of a free market economy?
They allow government to make some economic decisions..
How can socialist economics play a major role in the economy than captalist economics?
A true capitalist economy is one in which the government takes no part in the creation and exchange of goods and services. In a true capitalist economy, there are no taxes, no public goods, no regulations on monopolies or quality of a product, no product is illegal to purchase or sell, there are no price limits. The government serves only politically to pass and enforce laws.A socialist economy is one in which the government uses a large progressive tax to provide all the goods and services the society needs. The government controls the economy.In the United States, we have what is known as a mixed economy. We are socialist in that we have a tax system that allows the government to supply public goods and services, such as education, health care, public transportation, national defense. We have regulations on medicine and food, also on monopolies. We outlaw the sale of illegal drugs and harmful substances. We are capitalist in that the government does not provide all of the goods necessary. Unlike in a socialist economy, we let prices be set by sellers based on demand. We also let producers produce as much as they want of anything the is legal. Another thing, we don't ration, or say what a person can or cannot buy.I hope that answers your question.
What part of economy finances public goods?
public sectors
