In the United States, people pay taxes so government can provide services to the people. What is one benefit of the government providing services instead of allowing the free market and private businesses to do so?

Question

In the United States, people pay taxes so government can provide services to the people. What is one benefit of the government providing services instead of allowing the free market and private businesses to do so?

A. Government can provide services that would not be practical for private businesses to provide, such as a national military.

B. Government is generally more efficient at providing goods and services than private businesses.

C. Businesses should not provide services because a free market would be more efficient.

D. Businesses make better decisions than government about what services are in the best interest of society as a whole.

My answer would be A.

Answer 1

Your answer, A, is correct. One benefit of the government providing services instead of allowing the free market and private businesses to do so is that the government can provide services that would not be practical for private businesses to provide, such as a national military.

To arrive at this answer, you need to understand the concept of public goods, which are goods or services that are non-excludable and non-rivalrous. Non-excludable means that it is not possible to exclude individuals from consuming the good or service, even if they do not pay for it. Non-rivalrous means that one person's consumption of the good or service does not diminish its availability to others.

In the case of a national military, it is a public good because once it is provided, it is difficult to exclude individuals from its protection, and one individual's consumption of national defense does not diminish its availability to others. Private businesses would not find it practical or profitable to provide a national military because they would not be able to exclude non-paying individuals from its protection.

Therefore, the government steps in to provide services like national defense that private businesses would not provide. This is just one example of how the government can provide services that the free market and private businesses may not be equipped or incentivized to offer.

In the United States, people pay taxes so government can provide services to the people. What is one benefit of the government providing services instead of allowing the free market and private businesses to do so?

Yes, A.

Your answer, A, is correct. One benefit of the government providing services instead of allowing the free market and private businesses to do so is that the government can provide services that would not be practical for private businesses to provide, such as a national military.