In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.

Question

Quizplus · Accepted Answer

This statement refers to the concept of public goods and market failure. Public goods, such as national defense, public parks, and street lighting, are non-excludable and non-rivalrous, meaning they are available to all members of society and one person's use does not reduce availability to others. The market may fail to provide these goods at an optimal level because private entities cannot easily exclude non-payers from using them, leading to underproduction. Government intervention, through raising taxes to fund these goods, can correct this market failure and potentially make everyone better off by ensuring the provision of essential services that benefit society as a whole.

In Some Cases the Government Can Make Everyone Better Off