Question

Government intervention in education and health services is considered necessary because these services:

Options

• Have only short-term impacts on society

• Can be perfectly delivered by private markets alone

• Generate only private benefits for the consumers

• Generate private as well as social benefits

Answer 1

Education and health generate private as well as social benefits and have significant long-term impacts on society. Because the benefits spill over to society at large, private markets alone may undersupply these services, justifying government intervention.