Government can reallocate resources away from private goods towards public goods, usually through:

Question

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The government can use taxes to decrease consumption of certain private goods (such as tobacco or alcohol) and redirect those resources towards public goods such as education or healthcare through government spending. This reallocation of resources allows for the provision of public goods that benefit all members of society rather than just individuals. Tariffs and quotas (A) primarily affect international trade and do not necessarily reallocate resources towards public goods. The laws of supply and demand (B) reflect market forces but do not necessarily direct resources towards public goods. Positive and negative externalities (D) can be considered in the allocation of resources, but do not necessarily lead to the reallocation of resources towards public goods.

Government Can Reallocate Resources Away from Private Goods Towards Public