Assuming positive externalities in consumption,the type of government action that could bring about an efficient level of production would be

Question

Quizplus · Accepted Answer

A subsidy on each unit consumed equal to marginal external benefits aligns the private marginal benefit with the social marginal benefit. This encourages consumers to consume more of the good or service, resulting in higher social welfare. This approach is more effective than a tax, as a tax would discourage production, which would not be optimal from a social welfare perspective.

Assuming Positive Externalities in Consumption,the Type of Government Action That