To choose the optimal level of government expenditures, G*, the government

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To choose the optimal level of government expenditures, the government must know the preferences of all consumers over private and public goods. This is because it needs to determine the trade-off between spending on public goods, which can benefit everyone in the society (such as infrastructure, public safety, and education), and spending on private goods, which only benefit the individuals who consume them. By understanding the preferences of all consumers, the government can choose the level of government expenditure that maximizes the overall well-being of the society.

To Choose the Optimal Level of Government Expenditures, G*, the Government