Why does the government not supply some commodities free? Why does it charge a token price for them?
Answers
Answer:
Explanation:
Certain goods and services are considered essential for our existence . These includes medical services, education services and health services. The current market price of these services makes it difficult for the poor people to avail it. To counter this issue, Government as well as some private ‘Charitable Institutions’ come forward to provide these services to the underprivileged section at a price which is much below the cost of production per unit. This price is known as token price.
The government charges a token price from the poor people in order to prevent the misuse of these services. If provided free, some section of the people may try to take advantage of the situation and misuse the amenities provided under this scheme. For example people may stay back in hospital for a longer duration so that he/she can avail free food and shelter.
Hope this helps.