Question

Suggestion to overcome the economic problem of national defence as public goods

Suggestion to overcome the economic problem of national defence as public goods

Homework Answers

Answer #1

National defense is public good which exhibited characteristics of non rivalry and non excludability and thus it is accessible to everyone. Thus government spending on national defense is public good but leads to free rider problems as the cost borne by government is funded through the income taxes paid by citizens. However not all citizens pay income taxes and many of them evade causing the burden to be borne by specific set of individuals.

Rhus to overcome such economic problems government mjst impkse penalties and stricter norms for non compliance and tax evasion and thus social pressures and appeals by government can eliminate the free rider problem.

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