Asked by Vanessa Ramirez on May 06, 2024
Verified
In some cases the government can make everyone better off by raising taxes to pay for certain goods that the market fails to provide.
Government Intervention
Actions taken by a government to influence the economy beyond its basic functions, such as regulation, subsidies, and tax policies.
Taxes
Mandatory financial charges or levies imposed by a government on individuals or entities to fund public expenditures.
- Comprehend the function of governmental intervention in supplying public goods and addressing external effects.
Verified Answer
MK
Matin KamenicaMay 12, 2024
Final Answer :
True
Explanation :
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.
Learning Objectives
- Comprehend the function of governmental intervention in supplying public goods and addressing external effects.
Related questions
Private Markets Usually Provide Lighthouses Because Ship Captains Have the ...
Free Goods Are Usually Efficiently Allocated Without Government Intervention
Because the Benefits of Basic Research Are Obvious and Easy ...
In the United Kingdom,most Public Television Programming Is Paid for ...
The Government Is Able to Alter the Outcome of the ...