3.4 Direct Provision Of Goods And Services And Provision Of Iinformation

Question 1

What is direct provision of goods and services

Answer 1

A way in which a government can intervene in a market by providing certain goods and services directly

Question 2

What is the aim of it

Answer 2

Aims to correct market failure caused by
- public goods such as national defence and street lighting
- positive externalities and imperfect information about the beneficial effects such as education and healthcare

Question 3

Nationalisation

Answer 3

Refers to the process whereby private sector firms re transferred into public ownership and are owned and controlled in some way by the government

Question 4

Keys area of involvement

Answer 4

1. Healthcare and education
   -ensure affordable
2. Public Utility
   -government ensures they are available and affordable for the people
3. National defence and public safety

Question 5

Strength of direct provision

Answer 5

1. Equitable access
   - all citizens have access to sssential services
2. Quality Control
   - government can ensure high standards in particular sectors like health and education
3. ## Social welfare

Question 6

Limitations of direct provision

Answer 6

1. Efficiency concerns
   -Government run services are often criticised for lacking the efficiency and innovation characteristics of the private sector
2. Cost implication
   - it can be financially burdensome for the government
3. Bureaucratic inefficiencies

Question 7

Nationalisation meaning

Answer 7

The process whereby private sector firms are transferred into public ownership and are owned and controlled in some way by the government

Question 8

Advantages of nationalisation

Answer 8

1. Nationalised industry can benefit from economies of scale , lowering cost and possibly price

2.its easier to control the negative externalities and encourage the positive externalities

3. Prevent monopoly power being held by a private firm

Question 9

Disadvantages of nationalisation

Answer 9

1. Lacks the incentive to be efficient

2.lack of competitive pressure

3. Decision could be taken primarily for political rather than economic reasons