Which of the following statements about the provision of public goods is true? a

Question

Which of the following statements about the provision of public goods is true?

a. Public goods are generally provided by government because there are usually large external costs associated with them.

b.Public goods are generally provided by government because there are usually large external benefits associated with them.

c.Public goods are generally provided by government because they are very expensive to construct.

d.Public goods are generally provided by government because in the absence of government, there is no incentive for private industry to provide the good.

d.Public goods are generally provided by government because they are good for the public

Explanation / Answer

Answer:

Which of the following statements about the provision of public goods is true?

d. Public goods are generally provided by government because in the absence of government, there is no incentive for private industry to provide the good.

   We can agree, the public good is costly to exclude individuals from consuming a good. The public good received by one person do not reduce the benefits received by anyone else, the social value of public goods is substantially greater than the private value.

      National Defence, knowledge, and etc., public goods, are not excludable, the free-market quantity is zero, so it is less than the efficient quantity. If no intervention of government, the private firms may not provide the incentives for the public in this manner.

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