Question

Which of the following is a disadvantage of government provision of a public good such as national defense?

(i) The government does not know the exact willingness of consumers to pay for the public good.
(ii) The free-rider problem is more likely to occur when the government provides a public good than when the private sector provides a public good.
(iii) Taxpayers do not agree on the optimal quantity of the public good that the government should provide.

A (i) only
B (i) and (ii) only
C (i) and (iii) only
D (i), (ii), and (iii)

Answer 1

The disadvantages of government-provided public goods are the government's lack of precise knowledge of consumer willingness to pay and the disagreement among taxpayers on the optimal quantity to provide, not an increased occurrence of the free-rider problem.

Step-by-step explanation:

A disadvantage of government provision of a public good such as national defense is that (i) the government does not know the exact willingness of consumers to pay for the public good, and (iii) taxpayers do not agree on the optimal quantity of the public good that the government should provide. The free-rider problem is inherently tied to public goods whether provided by the government or the private sector; however, it is arguably more effectively managed by the government through taxation and legal compulsion. Hence, the correct answer is C (i) and (iii) only.

Answer 2

Answer: C (I) and (III) only

Explanation: (I) Generally, tax payers have varying needs/ demands which may not be in line with a public good. Hence, they may not be willing to pay for such public goods,example include some tax payers prefer to go to the office using bicycle,if the Government good is Mass transit system they will not be willing to pay for it.

(ii) The quality of a given government good is also one of the reasons/ disadvantages of provision of a public good.Some persons may not be satisfied with goods example include if a government is providing 12kg of gas to all house hold not minding the requirements of each house hold,some households where the required quantity is higher will not agree.