'Public provision' refers to those goods and services financed through the budget and:
Acan be used without any direct payment
Bcan be used only with direct payment
Ccan be used by taxpayers only
Dis available through online payment only
Answer:
A. can be used without any direct payment
Read Explanation:
Public Provision of Goods and Services
Definition and Characteristics
- Public provision refers to the supply of goods and services that are funded through government budgets, typically derived from taxation.
- A key characteristic of goods and services provided publicly is that they can be accessed and used by the public without requiring direct payment at the point of consumption.
- Examples include national defense, street lighting, public parks, and basic education in many countries.
Economic Rationale
- The concept is rooted in the economic theory of market failures, particularly concerning public goods and merit goods.
- Public Goods: These are non-excludable (difficult to prevent people from using them) and non-rivalrous (one person's use does not diminish another's). Examples: clean air, national defense. Markets often under-provide public goods, necessitating government intervention.
- Merit Goods: These are goods that society deems beneficial for individuals and that individuals might under-consume if left solely to the market. Examples: education, healthcare. Governments provide or subsidize these to ensure wider access.
- The financing through the budget ensures that the costs are distributed across the population via taxes, allowing for widespread access to essential services that might otherwise be unaffordable or unavailable.
Financing and Provision
- Budgetary Funding: The financing comes from general tax revenues (income tax, sales tax, corporate tax, etc.) or other government income sources.
- Direct Provision: The government may directly produce and deliver the service (e.g., public schools, police services).
- Subsidization or Vouchers: The government may fund private providers to deliver the service, or provide subsidies/vouchers to consumers to purchase the service in the private market (e.g., healthcare subsidies, education vouchers).
Distinction from Private Goods
- Private Goods: In contrast, private goods are excludable (payment is required for consumption) and rivalrous (consumption by one person prevents consumption by another). Examples: a loaf of bread, a car.
- The distinction highlights the role of government in ensuring access to goods and services deemed essential or beneficial for societal well-being, where market mechanisms alone might fail.
