A Level Economics AQA Practice Exam

What is meant by state provision?

1. Government restricting private sector involvement

2. Government providing public and merit goods directly free of charge

3. Privatization of public services by the government

4. Government setting competitive prices for private goods

The correct answer is: Government providing public and merit goods directly free of charge

The concept of state provision refers to the government’s role in delivering public and merit goods directly to the population without charging them for these services. This is essential for ensuring that certain goods and services, which may not be adequately provided by the private sector due to their non-profitable nature, are accessible to everyone. Examples include education, healthcare, and public transportation, where the government intervenes to either provide these goods itself or fund them to guarantee universal access. This approach is particularly important because public and merit goods often face issues of underproduction in a free market, leading to inequities in access. By providing these goods free of charge, the government aims to promote social welfare and ensure that all citizens have equal access to essential services, irrespective of their financial status.