Question

“In the public sector, the firms that are run and operated by the government do not have to make a profit. They can charge a lower price than privately owned firms.”

Do you agree this argument? Why or why not? Discuss and explain your reasoning.

Answer 1

Yes, the public sector firms in the market are not profit oriented but there for the welfare of the people in the market, they are generally involved in selling the goods that have huge positive externality in the market, for example, vaccinations. these goods are generally sold at a price lower than the market price because they enable the consumer to buy more goods in the market by increasing their purchasing power. or these are the goods which are extremely essential for the consumers.

For example, food at the time of disasters, transportations, public security etc.