Encouragement of voluntary contributions to the provision of public goods:
A)will always lead to the socially optimal provision of public goods.
B)may lead to the provision of public goods.
C)will result in too much of the public good being provided.
D)is required to provide private goods.

Question

Quizplus · Accepted Answer

Encouraging voluntary contributions to the provision of public goods may lead to some provision of public goods, but it is unlikely to result in the socially optimal provision. This is because individuals may free-ride and not contribute, which would result in under-provision of the public good. Therefore, government intervention through taxation or regulation may be necessary to ensure the efficient provision of public goods. The statement is untrue for D as private goods are provided with the help of market forces and not voluntary contributions.

Encouragement of Voluntary Contributions to the Provision of Public Goods