Which of the following is a valid reason for the government rather than the market to finance the provision of certain economic goods and services?
A)When the government provides economic goods, they are free; costs are incurred when such goods are provided by private firms.
B)Voters tend to be better informed than market consumers are.
C)Decision makers in the market sector are motivated by self-interest, whereas political decision makers are primarily motivated by altruism (the desire to help others).
D)Public goods tend to be undersupplied through the market since it is difficult for potential suppliers to withhold such goods from nonpaying consumers; the government can use taxes to overcome this problem of nonpayment.

Question

Which of the following is a valid reason for the government rather than the market to finance the provision of certain economic goods and services?
A)​When the government provides economic goods, they are free; costs are incurred when such goods are provided by private firms.
B)​Voters tend to be better informed than market consumers are.
C)​Decision makers in the market sector are motivated by self-interest, whereas political decision makers are primarily motivated by altruism (the desire to help others).
D)​Public goods tend to be undersupplied through the market since it is difficult for potential suppliers to withhold such goods from nonpaying consumers; the government can use taxes to overcome this problem of nonpayment.

Quizplus · Accepted Answer

Public goods have characteristics such as non-excludability and non-rivalry which make it difficult for the private sector to provide them at a profit, as they cannot exclude non-paying consumers and there is no scarcity of the good. Therefore, the government has to finance the provision of such goods and services through taxes to ensure that they are supplied in sufficient quantity to meet the needs of the society as a whole.

Which of the Following Is a Valid Reason for the Government