Government in a market system can increase economic eﬃciency by collecting taxes in order to subsidize the production of

Question

Quizplus · Accepted Answer

Government in a market system can increase economic efficiency by collecting taxes in order to subsidize the production of public and quasi-public goods. These goods are often under-produced by the private sector because they provide non-excludable benefits to society as a whole, rather than just to individual consumers. By subsidizing their production, the government can increase the overall level of production and consumption of public and quasi-public goods, leading to a more efficient allocation of resources.

Government in a Market System Can Increase Economic Eﬃciency by Collecting