Because government bodies have the power to make up for inadequate supply of a good:
A) its presence as a producer is in virtually every market.
B) it can be efficiency enhancing in markets for public goods.
C) they have incentive to compete with local businesses.
D) None of these statements is true.

Question

Quizplus · Accepted Answer

Government bodies have the power to provide public goods that the market may otherwise fail to provide adequately, such as national defense or public infrastructure. In these markets, government provision can be more efficient than private provision, as there is no profit motive driving up prices or causing underinvestment in the public good. Therefore, government presence as a producer is most relevant in markets for public goods.

Because Government Bodies Have the Power to Make Up for Inadequate