Discuss four kinds of economic or social problems that result in focusing public attention on an issue.

Question

What will be an ideal response?

Answer 1

First, public goods are goods or services that, once produced, are consumed by a relatively large number of individuals and whose consumption is difficult or impossible to control. Consumption of these goods is not excludable. Thus, the enjoyment of national defense cannot be excluded to citizens of a country. Government can remedy the problem of free riders who do not contribute to a public good through its power of taxation. Second, externalities occur when the activities of one economic unit affect the well-being of another unit and no compensation is paid for the benefits or costs created. Pollution is the classic example of a by-product of the production process, but its social costs are excluded from the cost of the product manufactured. Government can use its power of regulation to ensure that the societal cost of pollution is paid by the producer. It is important to note that not all externalities are negative. Third, issues of rights and the application of law to address societal inequities are considered peculiarly public. Finally, programs that involve a great deal of risk may require the socialization of the risk through public means. For example, government provided guarantees to student loans made by banks. The inability of other institutions in society to produce effective and equitable solutions may be sufficient to place an issue on the public agenda.