Question

To achieve optimal provision of public goods, the,
a. market should be allowed to arrive at an equilibrium without government intervention.
b. Government must limit the provision of the goods. c. government must tax producers of the goods. d. government must either provide the goods or subsidize their production.

Answer 1

correct answer is

D. government must either provide the goods or subsidize their production.

For public goods to reach/benefit maximum people, show provide it or subsidize its rate so that it can reach maximum people.

Public goods include roads, railways, sanitation, light houses, defence system. These are not provided with the objective to earn an income. They are to develop the quality of human life and the economy.

If the market is allowed to reach equilibrium with out intervention, a huge part of the population will not get the benefits of it since players in the market have the objective to make a profit and public goods are not with the objective of profit making.

If the government limits its provision, then people it will not be available to a large part of the population.

If the government taxes producers of the goods then the producers will leave the market.