Which of the following correctly describes what a Pigouvian subsidy is?
A) Subsidies received by the producers are called Pigouvian subsidies.
B) Pigouvian subsidies are awarded to producers whose goods have external benefits.
C) Taxes on producers creating negative externalities are called Pigouvian subsidies.
D) Lower corporate tax rates are also known as Pigouvian subsidies.

Question

Quizplus · Accepted Answer

A Pigouvian subsidy is a government subsidy that is granted to producers of goods that have positive externalities, meaning that there are benefits to society beyond just the private benefits received by consumers. This subsidy is meant to incentivize the production of these goods and help correct the market failure caused by the underproduction of goods with positive externalities.

Which of the Following Correctly Describes What a Pigouvian Subsidy