Question

Describe the difference between public goods and private goods. Explain why government action is necessary to ensure the provision of public goods

Answer 1

Private goods are those products that must be purchased to be consumed, and consumption by one individual prevents another individual from consuming it.Public goods are those goods and services provided by the government because the market cannot supply them at a profit. Government action is necessary to ensure the provision of public goods because the free rider problem leads to market failure which causes the market not to provide them.