Public Goods Provision Impacts

Steps:

• Define public goods as non-excludable and non-rivalrous, leading to underprovision by markets.
• Increasing provision requires more government funding, typically via taxes.
• Assess options: identify traits inherent to public goods versus funding effects.
• Determine which outcome contradicts standard economic expectations.

Why D is correct:

• Public goods provision increases government spending, funded by higher taxes per fiscal policy, making tax reduction unlikely.

Why the others are wrong:

• A: Non-excludability is a defining feature of public goods, persisting with any provision level.
• B: Increased provision corrects market failures, enhancing resource efficiency.
• C: Opportunity cost arises from diverting resources to public goods, always present in allocation choices.

Final answer: D