The government can increase economic efficiency by using tax revenue to produce public goods.

Question

Quizplus · Accepted Answer

Public goods are goods that are non-excludable and non-rivalrous, meaning they cannot be segmented or consumed fully by just one individual, and their consumption by one individual does not reduce their availability to others. Examples include street lights, public parks, and national defense. These goods are typically underproduced by the market because it is difficult to charge consumers for their use and it may not be profitable for private firms to produce them. The government can use tax revenue to produce these goods, which can increase economic efficiency by promoting the well-being of society as a whole.

The Government Can Increase Economic Efficiency by Using Tax Revenue