Which of the following statements is correct?
A)Private goods yield direct benefits to the purchaser and are financed by government.
B)Public goods yield widespread external benefits and are purchased by government with tax revenues.
C)Public goods are bought voluntarily out of private incomes and yield no significant external benefits.
D)Public goods are bought voluntarily out of private incomes and yield widespread external benefits.

Question

Quizplus · Accepted Answer

Public goods are typically provided by governments because they yield widespread external benefits that cannot be easily captured by private individuals or firms. Private goods, on the other hand, yield direct benefits to the purchaser and are typically financed through private means such as individual purchases or loans. Option C is incorrect because public goods are not typically bought voluntarily out of private incomes. Option A is incorrect because private goods are typically financed through private means rather than government funding. Option D is partially correct in that public goods do yield widespread external benefits, but they are not typically bought voluntarily out of private incomes.

Which of the Following Statements Is Correct