A viable government solution to an external benefit is a:
A) tax on the party producing the cost.
B) subsidy to the party producing the cost.
C) tax on the party incurring the cost.
D) subsidy to the party incurring the cost.

Question

Quizplus · Accepted Answer

A subsidy to the party incurring the cost can encourage more consumption or production of the good or service that generates the external benefit, aligning private incentives with social benefits.

A Viable Government Solution to an External Benefit Is A