Question

Explain the role of government in providing public goods and how doing so changes the definition of a market economy to a mixed economy.

Answer 1

Public goods are like goods such national defence, national forest and parks, interstate highways, waterways and other which have to financed through the public sector and compulsory taxation.People who would use the system without paying for it at all.its very difficult to provide goods and services by the private enterprise.public goods have larger cost with minimum revenue hence it's very difficult to survive in this competitive market by the private enterprise.public goods generate economic benefits like jobs, revenue, consumer satisfaction.

Market economy is an economic system in which the decision regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand

While mixed economy is defined as an economic system blending elements of planned economies,free market with state interventionism or private enterprise with public enterprises.in mixed economy varying degrees of public utilities and essential services are provided by government with state activity often limited to providing public goods and universal requirements.