Government can use its ability to coerce towards improving economic efficiency by:

Question

Quizplus · Accepted Answer

By increasing the production of output with external benefits, the government can achieve economic efficiency as the private sector may not produce enough of these types of goods and services due to the difficulty in capturing the full value of the benefits. When the government steps in and produces these goods and services, it can provide a net benefit to society, leading to increased economic efficiency. Reducing the production of output with external benefits or public-goods characteristics can negatively impact societal welfare, and increasing the production of output with external costs can increase inefficiencies and harm societal welfare.

Government Can Use Its Ability to Coerce Towards Improving Economic