To achieve the optimal provision of public goods, the
A)market should be allowed to arrive at an equilibrium without government intervention.
B)government must limit the provision of the goods.
C)government must tax producers of the goods.
D)government must either provide the goods or subsidize their production.

Question

Quizplus · Accepted Answer

Public goods are non-excludable and non-rivalrous, which means that they cannot be provided efficiently by the market. Therefore, the government must either directly provide the goods or subsidize their production by private firms to achieve the optimal provision of public goods. This is because without government intervention, private firms have no incentive to provide public goods, as they cannot charge consumers for them and may not be able to recoup their costs. Limiting the provision of goods or taxing producers would not necessarily result in the optimal provision of public goods.

To Achieve the Optimal Provision of Public Goods, the