| 1. Provision of public goods |
| 2. Provision of merit goods |
| 3. Poverty reduction |
A) 1 only
B) 2 only
C) 3 only
D) 1, 2 and 3
Correct Answer: D
Solution :
Provision of public goods like defence which no private agency can be entrusted with. Provision of merit goods - goods like education and housing - through policies which encourage the consumption of such goods and discourage the use of non-merit goods like cigarettes. Poverty reduction is considered a prime responsibility of all modern governments, as the market caters to the needs of only those who can afford to pay, not of the poor.
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