Final answer:
A government does not sell services in a market but is funded by tax dollars and faces no competitors, unlike not-for-profits which might earn revenue through services but can face competition.
Step-by-step explanation:
To determine whether an entity is a government or a not-for-profit organization, consider whether it sells products in a market or relies on tax dollars. A clear characteristic of a government entity is that it does not need to compete in a market for its revenue, whereas a not-for-profit might earn revenue through services but without the intent to distribute profits. Governments receive funding primarily through taxation and are not directly challenged by competitors in the same way private-sector firms are.
For example, if a department like the U.S. Department of Education performs poorly, citizens cannot turn to another provider for public education services. This lack of competition is indicative of a government agency. In contrast, a not-for-profit organization might face competition from other entities in its efforts to provide services and garner donations, even though it also does not aim to make a profit.