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Chapter 18: Q13 (page 441)

How does a government agency raise revenue differently from a private company, and how does that affect the way government makes decisions compared to business decisions?

Short Answer

Expert verified

Government revenue raising decisions are based on social welfare. Private revenue raising decisions are based on profit maximisation.

Step by step solution

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01

Government & Private aim concept

Government actions are oriented with social welfare ideology.

Private actions are oriented with profit & wealth maximisation ideology.

02

Revenue detailed explanation

Government collects revenue for public expenditure on welfare & national defence etc.

Government's fiscal policy of revenues & expenditures caters following :

  • Resources' reallocation & redistribution for better Equity & Regional Balance
  • To enhance economic growth & development - by investment in infrastructure, health & education etc.

Private agencies raise revenues for their personal organisational objectives (profit, market acquisition etc) achievement.

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