Question

problems government faces in provision of public goods

Answer 1

Public goods are those goods which are nonexcludable and non-rival. Nonexcludable means that it is not possible to prevent an individual from using the good and non-rival means that the consumption of the good by one person does not decrease the ability of other people to consume the good. Such as a public park, street lightning, national defense, e-learning, etc.

As the government cannot prevent the people who have not contributed to the creation of the park,so it will lead to market failure. Free-rider is the problem associated with the public goods, as public goods provide benefits to the people who have not paid for it so,now-payers enjoys the benefits at no cost. This will lead to a production level which is not socially optimal and creates a deadweight loss in the market.