Why does the government oversee the provision of public goods? A. Public goods and services require resources in production that are scarce; therefore, the government must ensure that production is limited. B. Public goods are goods and services that tend to result in negative externalities; therefore, the government must oversee that the provision of these goods and services is limited. C. Public goods are goods and services that are non-excludable and rivalrous. The government must oversee the fair distribution of these goods; otherwise, they would be distributed on a first-come, first-serve basis. D. Public goods are goods and services that are non-excludable and non-rivalrous; therefore, it is not profitable or in the best interest of private businesses to provide these goods.

Answer 1

The correct answer is D. Public goods are goods and services that are non-excludable and non-rivalrous; therefore, it is not profitable or in the best interest of private businesses to provide these goods.

Public goods, such as national defense, clean air, and public parks, are characterized by their ability to be consumed by multiple individuals simultaneously without depleting the resource (non-rivalrous) and by the fact that individuals cannot be effectively excluded from using them (non-excludable). Because private companies cannot easily charge consumers for these goods or exclude non-payers, they often lack the incentive to provide them, leading to underproduction in a free market. This justifies government intervention to ensure these essential services are made available to all.