Provide an example of a specific public good that is provided by State or Local

Question

Provide an example of a specific public good that is provided by State or Local government, determine an externality that could impact it’s provision, and identify one way the government can respond.
Provide an example of a specific public good that is provided by State or Local government, determine an externality that could impact it’s provision, and identify one way the government can respond.
Provide an example of a specific public good that is provided by State or Local government, determine an externality that could impact it’s provision, and identify one way the government can respond.

Explanation / Answer

Water is an example of public good .

Water is provided at zero cost . So the consumer will demand water until it's marginal benefit is equal to zero . Thus charging zero price of good would lead to excess consumption.

Similarly if we charge the price for the good then the consumption will be reduced thus this will lead to under consumption. This is because for few customers marginal benefit were more than cost but they are denied the good because of price being charged. Thus this will lead to under consumption.

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