Th1.4: Disadvantages of State Provision of Public Goods

Question 1

What are the four disadvantages of state provision of public goods?

Answer 1

expensive and opportunity cost
wrong combination of goods
inefficient
corruption and conflicting objectives

Question 2

Expensive and opportunity cost

Answer 2

as it says. administration costs are a problem

Question 3

Wrong combination of goods

Answer 3

since the market is not involved, government may produce the wrong combination of goods as consumers cannot indicate their preferences.
e.g too many soldiers, not enough beds

Question 4

What aims to reduce the wrong combination of goods problem?

Answer 4

democracy aims to reduce this problem, as consumers vote for leaders like them

Question 5

Inefficient

Answer 5

the government may be inefficient at production since they have no incentive to cut costs

Question 6

Corruption and conflicting interests

Answer 6

governments officials may suffer from corruption and conflicting interests