Public goods may be efficiently provided if they are financed through:
A) license fees.
B) user charges.
C) government tax revenues.
D) market exchange.

Question

Quizplus · Accepted Answer

Public goods are those goods that are non-excludable and non-rivalrous in consumption. This means that they cannot be denied to anyone and their use by one person does not limit their use by another. As a result, public goods are generally underprovided by the market mechanism. However, governments can intervene and finance the provision of public goods through taxation. This is a more efficient method than relying on license fees or user charges which may not be able to generate sufficient revenue to provide the public good. Market exchange is also not feasible since the characteristics of public goods make it difficult for the market to provide them efficiently.

Public Goods May Be Efficiently Provided If They Are Financed