Chapter 24: The Role of Government

Question 1

Local government

Answer 1

Provide a range of goods and services including refuse collection, libraries, housing and local roads. To finance these, local governments may impose some taxes and charges and may receive grants from the national government.

Question 2

Government role as producer

Answer 2

• Natural monopoly - These are industries where a single firm can produce at a lower average cost than two or more firms.
• Strategic industries - These are industries that are important for economic development or the safety/secutiry of a country. EG. telecommunication
• National champions - INdustries that have a potential to be world leaders.
• Provide goods which are underprovided, not provided at all, or essential for reasons of equity. - Merit good, public goods, housing, healthcare

Question 3

Government and private firms