The public provision of a good that is a substitute for a private good will:

Question

Quizplus · Accepted Answer

When a public good substitutes a private good, consumers are more likely to purchase the public good instead of the private good. This leads to a reduction in demand for the private good, which in turn reduces the demand for labor in the private sector. Thus, option A is the best answer. The provision of public goods does not necessarily reduce the wage rates of government workers (option C) or reduce work effort (option D).

The Public Provision of a Good That Is a Substitute