Question

Which of the following is a valid reason for governmental entities to engage in business-type activities?(A) The entity does not want control over the activity.(B) The activity competes with general government activities.(C) The entity does not want to subsidize the activity.(D) The entity can provide the services more cheaply or efficiently than can a private firm.

Answer 1

Answer: Option D

     

Explanation: The prime objective of every government in the world is to develop their nation and make the life of their population better. The living standard of the population heavily depends on the basic necessities of life.

Therefore, sometimes government engage in business activities to provide individuals certain commodities at subsidized prices. Most of the government entities do not work for profit thus they are able to provide commodities cheaper than private sector.

Hence, from the above explanation we can conclude that option D is correct.