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The Government’s Role of providing public goods in Free Enterprise USA.

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Presentation on theme: "The Government’s Role of providing public goods in Free Enterprise USA."— Presentation transcript:

1 The Government’s Role of providing public goods in Free Enterprise USA

2 Public good  a shared good or service for which it would be impractical –Examples: roads, dams Instead of: ‘making consumers pay individually’  –The government Instead of ‘excluding non-payers’  –The Government believes certain facilities should Providing Public Goods

3 Characteristics: –Any number of consumers –Increasing the number of consumers Characteristics of Providing Public Goods

4 Costs and Benefits of Public Goods The government steps in if they believe Cost is critical in determining whether or not something will be a public good When a good or service is public: 1.The benefit to each individual is less than the cost 2.Total benefits to society are greater than

5 Free-Rider Problem Free rider  someone who would choose not to pay for a certain good or service, Free riders consume what they The free-rider problem suggests that if the government stopped collecting taxes and relied on voluntary contributions,

6 Market Failures Market failure  a situation in which the market Building a road example  if a free market regulated it, companies would not choose to build roads in low populated areas and charge tremendous

7 Externality  economic side effect of a good or service that generates benefits or costs Positive externalities: –Part of the benefit of a good will be gained Negative externalities: –Unintended costs paid for by someone

8 The government encourages the –Examples: education  benefits you as a student and also society benefits from an educated population The government aims to –Examples: acid rain, pollution Government Goals


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