Economics Policy Public Goods Essay Example | Topics and Well Written Essays - 500 words

Economics Policy Public Goods - Essay ExampleIf program line is provided by the mystic market alone, it would result in imbalance, and hence, the market mechanism would not be able to match demand and supply. The reason for this is the fact that clubby forces are not concerned with the globe interest they are concerned about their own returns and nominal benefit. Therefore, the private market forces will only sire those goods which would lead to maximum profits. The private market forces ignore neighborly costs and benefits, and therefore, will not produce the optimal quantity of merit or price-excludable public goods.Education would be under-produced by the private sector. All merit goods are considered good for the people, and the government desires to provide them in abundance. Merit goods have more social benefit than private benefit. Therefore, the private sector would not provide them optimally. Education has large external benefits relative to private benefits, that is, social benefits are greater than private benefits. Under the price mechanism, there would be few firms willing to provide education, and they would charge high prices. High prices would reduce consumption because some or many people might not be able to afford education.