Which of the following is a method used by government to cope with the situation in which production of a good creates an external benefit?
A) Subsidising production
B) Imposing Coasian taxes
C) Running a lottery
D) Marketable permits
E) Removing property rights

Question

Quizplus · Accepted Answer

When production of a good creates an external benefit, the market may under-produce the good. To encourage more production, the government can subsidize the producers. This will lower their costs and encourage them to produce more of the good, leading to a more efficient outcome.

Which of the Following Is a Method Used by Government