Question

Should government provide this good/service? Why, why not? Use microeconomic theory and data to support your argument. Use at least three academic sources. Cite sources

why does the government provide public goods and services

Answer 1

Let's start with the understanding of economics in general which interpret as the economics is the study of production, distribution and consumprion, economics widely devided into Macroeconomics and Microeconomics; now Microeconomics is the economics which deals with market and decision making individual economic units including consumer and business. it is a logical starting point for study of economics. microeconomics devides private economics into two parts; Consumer and firms. These two parts give rise to the theory of consumer which deals with consumption (demand for goods and services) by utility maximizing individuals, and the theory of firm deals with the supply of goods and services by profit maximizing firms.

So the above explanation about the microeconomics creates the understanding about the asked situation for government to provide goods and services or not. suppose if they provide goods/services then what are the benefits to the consumenrs and what are losses from that transactions to the firms if governement provides goods and services.

let's see the benefit to consumer if governement provides the goods and services, however suppose if government provide the goods and services to the consumer in microeconomics then the consumer will usually get more cheaper goods and services as compared to they from the private firms so the demand for the basic required goods and services will increase and as per the demand increases then the governement will have to increase the supply to fulfill the demand of the goods and services. however because of this transaction of governement the firms will suffer the losses and because of the firms loss there will be major impact in state economy, so while thinking for providing the goods and services to the consumers there will be two way loss; where government has to provide the goods and services at very cheaper rate which again will have an impact on the economy by increasig the demand for the cheaper good and services rather prefering for the firms supply of goods and services which is comparitively at higher price. so here the the demand for the firms goods and services will likely to reduce as the demand for the government goods and services will increase, so as the demand for the firms' will decline the supply of the goods and services will also affect and both the slope will create a downward trend in short-run and which will ultimately affect the governement as the economy will suffer wit hthe said decision.