By S. K. Nath (auth.)
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Extra resources for A Perspective of Welfare Economics
In the case of national defence). Though a few more examples of public goods can perhaps be thought of, few goods and services provided by governments have the characteristic that as more is consumed of them by some persons, there is no diminution in the amount available for others. For example this is not true of education, health services, housing, recreational grounds, electricity, gas and transport, etc. Hence one cannot say that all publicly supplied goods are public goods in Samuelson's sense.
The line EF has only point I in common with the production possibilities frontier; everywhere else it lies beyond that frontier. 54 y o B FIG. 3 F x It is quite possible that at the point of equilibrium on the outward consumption line some individuals in the economy are actually worse off than before - say those whose old occupations are affected by imports and who have not been able to find equally attractive livelihoods. Hence we cannot say that foreign trade necessarily makes everybody better off in an economy.
Often an instrument affects more than one objective, just as an objective may be affected by more than one instrument. Objectives might be all fixed or all flexible, or a combination of the two kind. e. when certain specified magnitudes for them all must be attained), the main policy problem is to examine the compatibility of the fixed targets with the instruments. This can be a most illuminating exercise; for an interesting illustration of this see chapter 8 of Peacock and Shaw : compatibility will not be achieved if the targets and instruments are not equal in number.