ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The government plays a significant role in providing goods such as national defence, infrastructure, education, security, and fire and environmental protection almost everywhere. These goods are often referred to as “public goods”.

Detailed explanation-2: -Public goods are commodities or services that benefit all members of society, and which are often provided for free through public taxation. Public goods are the opposite of private goods, which are inherently scarce and are paid for separately by individuals.

Detailed explanation-3: -These goods are necessary for daily life and national development. Supply of these goods cannot be ignored. The private sector does not hold any interest in these activities because these goods are not profitable and don’t have a profitable market. Thus the government takes the onus of supplying these goods.

Detailed explanation-4: -A still useful definition of a collective good as distinguished from an individual good is that its ‘consumption’ by one individual does not reduce the possibility for other individuals to ‘consume’ it (Samuelson, 1954). A few examples are a TV broadcast, the police and a nation’s highway system (excluding toll ways).

Detailed explanation-5: -The types of public goods include security, education, knowledge, infrastructure, environment and health.