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Q. Why does government undertake an economic activity?
If ever an activity has large externality or spill over and includes a large number of people, it may be found better that government undertakes it. As David Hume once pointed out, it is easy for two persons to agree/bargain for terms of draining a field affecting them but it would be very difficult for a large number of persons to make the decision on terms of sharing cost of drainage.
Assume the Working Income Tax Benefit tops up a single individual's income by 25 percent of the amount that employment earnings exceed $3000, up to a maximum payment of $950. Suppo
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