PUBLIC GOODS

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(a) How, in general, should the public sector determine the price of the<br/>goods and services which it sells?<br/>(b) Suppose a public sector enterprise supplies a service which has high<br/>fixed costs and low marginal costs. It is instructed by the Treasury<br/>that it should set a price (or prices) which (a) make a significant<br/>contribution towards covering its fixed costs, and (b) maximises the<br/>public’s use of this service. What advice would you give on price<br/>setting so that these objectives can be achieved?

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关键词：public goods Public Goods good ods determine supplies achieved services general