Public Goods Require Tax Funding

Steps:

• Public goods are non-excludable and non-rivalrous, often provided by government to correct market failures.
• Increasing provision addresses underprovision, leading to benefits like efficient resource allocation.
• Funding comes from taxes, so expansion raises costs and opportunity trade-offs.
• Tax reduction contradicts the need for more revenue to sustain higher provision.

Why D is correct:

• Public goods provision increases government spending, typically funded by higher taxes per fiscal policy principles, not reductions.

Why the others are wrong:

• A: Non-excludability is inherent to public goods, persisting regardless of provision level.
• B: More provision corrects market failure, improving resource efficiency.
• C: Any increase incurs opportunity cost, as resources shift from alternatives.

Final answer: D