Choosing optimal user fees for government produced services is similar to choosing optimal taxes.
A) True
B) False
C) Uncertain

Question

Quizplus · Accepted Answer

Just like taxes, user fees should be set at a level that balances the government's need for revenue with the willingness and ability of users to pay. The optimal fee would be one that covers the cost of providing the service while not being so high as to discourage usage by those who need it. It may also be important to consider distributional effects and potential negative externalities.

Choosing Optimal User Fees for Government Produced Services Is Similar