Governments use subsidies
A)as a means of increasing government spending.
B)when they want to increase taxes.
C)to achieve an efficient outcome in a market with external costs.
D)to achieve an efficient outcome in a market with external benefits.
E)and pollution permits to achieve an efficient outcome in markets with external benefits.

Question

Quizplus · Accepted Answer

Governments use subsidies to encourage activities that have positive externalities, or external benefits, to achieve a more efficient market outcome.

Governments Use Subsidies