According to economic theory, government intervention should only be used when market mechanisms fail and the benefits of intervention outweigh the costs. This means that government should provide public goods only when they are necessary and efficient, and when private markets are not functioning properly.

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In General

Question 9

Multiple Choice

In general,

A) government must always provide public goods.
B) government is best able to provide all public goods.
C) government should only provide public goods when private solutions fail and the benefits of the goods exceed the costs.
D) the benefits of public goods will necessarily be less than the costs,so government must be relied upon to provide them.
E) the lack of a profit motive means government-provided public goods will be wasteful.

Correct Answer: