To increase efficiency,
A)taxes are used to overcome both external benefits and external costs.
B)subsidies are used to overcome both external benefits and external costs.
C)subsidies are used to overcome external benefits,and taxes to overcome external costs.
D)taxes are used to overcome external benefits,and subsidies to overcome external costs.
E)public provision is used to overcome external benefits,and vouchers to overcome external costs.

Question

Quizplus · Accepted Answer

Subsidies are provided to encourage activities that have positive externalities (external benefits), making them more attractive and likely to occur. Taxes are imposed on activities that have negative externalities (external costs) to discourage them and make their true social cost more apparent to those engaging in the activity.

To Increase Efficiency