Question

Which economist classified Public goods as 'Merit Goods' and "Public goods"?
1. Hugh Dalton
2. Richard Musgrave
3. Arthur Pigou
4. John Keynes

Answer 1

Correct Answer - Option 2 : Richard Musgrave

The correct answer is ​Richard Musgrave.

• Public Goods :
  • The government provides certain goods and services which cannot be provided by the market mechanism i.e. by the exchange between individual consumers and producers. which are referred to as public goods.
  • Examples - National defence, Roads, Government administration, etc. 
• It is necessary to understand the difference between private goods and public goods-
  • The benefits of public goods are available to all and are not only restricted to one particular consumer.
  • For example, if a person eats chocolate or wears a shirt, these will not be available to others. It is said that this person’s consumption stands in rival relationship to the consumption of others.
  • However, if we consider a public park or measures to reduce air pollution, the benefits will be available to all.
  • One person’s consumption of a good does not reduce the amount available for consumption for others and so several people can enjoy the benefits, that is, the consumption of many people is not ‘rivalrous’.
  • In the case of private goods, anyone who does not pay for the goods can be excluded from enjoying its benefits. If you do not buy a ticket, you will not be allowed to watch a movie at a local cinema hall.
  • However, in the case of public goods, there is no feasible way of excluding anyone from enjoying the benefits of the good.
  • That is why public goods are called non-excludable. Even if some users do not pay, it is difficult and sometimes impossible to collect fees for the public good.

•  Merit Goods :
  • According to Richard Musgrave, some commodities or services should be judged on the basis of need, rather than ability and willingness to pay. 
  • Example - Subsidies for agriculture, poor people.