The diagram below illustrates an external benefit. D₁ is the marginal private benefit and D₂ is the marginal social benefit. Using this diagram, demonstrate graphically and explain verbally how the government can subsidize the consumer so as to integrate the external benefit.

Question

Quizplus · Accepted Answer

The Answer of The diagram below illustrates an external benefit. D₁ is the marginal private benefit and D₂ is the marginal social benefit. Using this diagram, demonstrate graphically and explain verbally how the government can subsidize the consumer so as to integrate the external benefit.

The Diagram Below Illustrates an External Benefit