Which of the following is an example of a merit or public good provided by the government?

• A. Healthcare funded by the government
• B. Private car ownership
• C. Private education paid by individuals
• D. Luxury vacations

Answer: (A)

Health care funded by the government is an example of a merit good provided by the state because it creates positive externalities for society. When people are healthier, everyone benefits through higher productivity, lower transmission of disease, and reduced overall costs to the system. Without government intervention, individuals might under-invest in their health due to costs or information gaps, so the market would under-provide this service. By funding healthcare, the government improves access, equity, and overall welfare, addressing these market failures.

Private car ownership, private education paid by individuals, and luxury vacations are private goods: they are excludable and rivalrous and are typically financed or consumed privately, not provided by the government for societal welfare.