1. The Government’s Role of providing public goods in Free Enterprise USA

2. Providing Public Goods
Public good a shared good or service for which it would be impractical
Examples: roads, dams
Instead of: ‘making consumers pay individually’
The government
Instead of ‘excluding non-payers’
The Government believes certain facilities should

3. Characteristics of Providing Public Goods
Any number of consumers
Increasing the number of consumers

4. Costs and Benefits of Public Goods
The government steps in if they believe
Cost is critical in determining whether or not something will be a public good
When a good or service is public:
The benefit to each individual is less than the cost
Total benefits to society are greater than

5. Free-Rider Problem
Free rider someone who would choose not to pay for a certain good or service,
Free riders consume what they
The free-rider problem suggests that if the government stopped collecting taxes and relied on voluntary contributions,

6. Market Failures Market failure a situation in which the market
Building a road example if a free market regulated it, companies would not choose to build roads in low populated areas and charge tremendous

7. Positive externalities:
Externality economic side effect of a good or service that generates benefits or costs
Positive externalities:
Part of the benefit of a good will be gained
Negative externalities:
Unintended costs paid for by someone

8. Government Goals The government encourages the The government aims to
Examples: education benefits you as a student and also society benefits from an educated population
The government aims to
Examples: acid rain, pollution