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Asked by Salli Braswell on May 05, 2024

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Samuelson's theory of public expenditure demonstrates that

A) government is inefficient and will always engage in too much spending.
B) an optimal (or most efficient) level of output exists for every public good.
C) an efficient mix of public goods is produced when local land/housing prices and taxes come to reflect consumer preferences.
D) through government regulation of private industry, the optimal level of public good provision is achieved.

Samuelson's Theory

Refers to economist Paul Samuelson's contributions to economic theory, including insights on public goods, trade, and welfare economics.

Public Expenditure

Government spending on the provision of goods, services, and infrastructure to the public.

Public Good

Services or commodities provided to all societal members without a fee, by the government or a private organization, not for profit.

  • Recognize the conditions under which the provision of public goods is optimal, including the role of the government.
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Nathaniel husadaMay 11, 2024
Final Answer :
B
Explanation :
Samuelson's theory, particularly known for its exposition in "The Pure Theory of Public Expenditure," posits that for public goods—those goods that are non-excludable and non-rivalrous in consumption—an optimal level of output can be determined. This optimal level is where the sum of the marginal benefits to all individuals from an additional unit of the public good equals the marginal cost of providing that unit.

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