Given the following? statement: ?\"Providing health care is obviously a public g

Question

Given the following? statement: ?"Providing health care is obviously a public good. If one person becomes ill and? doesn't receive? treatment, that person may infect many other people. If many people become? ill, then the output of the economy will be negatively affected.? Therefore, providing health care is a public good that should be supplied by the? government." Health? care, as a? good, is best described? by: A. Health care should be supplied by the government because it generates positive externalities. B. Health care should not be supplied by the government because the private market preserves incentives to improve health care with innovation and medical technology. C. Health care should notshould not be supplied by the government because consumers pay a price well above the true cost of providing the service. D. Health care shouldshould be supplied by the government because it is nonexcludablenonexcludable. E. Both a and b.

Explanation / Answer

Option A.

Healthcare should be supplied by the government becaue it generates positive externalities as a healthy person is an asset for the self and also for the society. There are both marginal private benefits and marginal social benefits associated with healthcare and thus should be supplied by the government.

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