Discussion

Explanation:

Option 1 cannot be concluded from the passage. Although it has been stated that "However, markets fail … public intervention is thus needed", this is only under the specific condition of markets failing for “pure public goods”, not otherwise. So public intervention cannot be considered as the “panacea” or ultimate solution for market failure.
Option 2 can be concluded from "Implicitly, market competition ... problems." Eliminate option 2.
Option 3 can be concluded from "Voting mechanisms are ... raised." Eliminate option 3.
Option 4 can be concluded from “... the incentive problem of acquiring the private information … for public goods.”.
Option 5 can be concluded from "When the monopoly has ... problem.". The sentence says that when the natural monopoly is faced with problems, it is regulated by the regulatory commission and hence a solution can be expected.
Hence, the correct answer is option 1.

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