Public
Goods
and
Services
What Kind of Economy does the US have?
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We have a MIXED free-market
economy…
Because although MOST goods and
services are provided by private
businesses…
There is also LIMITED
GOVERNMENT INVOLVEMENT…
And so some ESSENTIAL goods and
services are provided by the
government.
Public Goods
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A public good is a good
or service that is
provided by the
GOVERNMENT.
The government
controls the PUBLIC
SECTOR of the
economy.
Everything else is
provided by the
PRIVATE SECTOR.
Which sector of the US
economy is BIGGEST?
The PRIVATE SECTOR.
Why Must the Government Provide
Some Goods and Services?
 With most products, if you cannot or will
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not pay, what happens?
YOU DON’T GET IT.
But there are some products from which
we CANNOT exclude non-payers…
And if we cannot EXCLUDE non-payers
from using something, the government
must provide it.
We cannot tell certain people that they are
PROHIBITED from using sidewalks and
roads…
We cannot tell certain people that they will
not be protected by law enforcement…
So, the government must provide these
things.
Which of the following is NOT an
example of a public good?
A.) a cheeseburger from McDonalds.
B.) a cheeseburger from the school cafeteria.
C.) this class.
D.) the Powder Springs Post Office.
Market Failure
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All of the previous
situations were
examples of market
failure-A situation in which
the free market
does not provide a
good or service
efficiently.
Whenever market
failure occurs, the
government should
provide the service.
The Poverty Threshold
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The Poverty
Threshold—an income
level below that which
is needed to support
families or households.
In 2011, the line for a
single-person
household was
$10,890…
And for a four-person
household--$22,350.
Families living below
this threshold usually
qualify for…
Welfare
• Welfare—government aid for the poor.
• The system began under Franklin
Roosevelt during the Great
Depression…
• And was expanded by Lyndon Johnson
in the 1960s’ War on Poverty.
Types of Welfare: “The Welfare Check”
 The official name of this
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program is “TANF”—Temporary
Assistance to Needy Families.
It provides cash aid to families
with dependent children.
Critics argue that TANF
provides TWO “perverse
incentives”…
1. Recipients tend not to take
advantage of educational
opportunities that might lead to
higher-paying jobs…WHY?
2. Recipients might be tempted
to have additional
children…WHY?
Other Types of Government Aid
 Food Stamps—most families who
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are eligible receive $300400/month to help purchase food
items.
Section 8—the US government
currently pays rent to private
landlords for approximately 3
million Americans.
Medicaid—provides free or
reduced-cost medical coverage to
Americans living in poverty.
DO NOT CONFUSE THIS WITH…
Medicare—which is NOT a welfare
program…
Medicare provides free medical
coverage to ALL Americans over
the age of 65.
Social Security is also NOT a
welfare program—it is available to
ALL Americans, irrespective of
income.
Which of the following is NOT
example of welfare?
A.) food stamps.
B.) medicaid.
C.) social security.
D.) section 8.