When a subsidy is imposed on a market with a positive externality: total surplus increases. the market quantity moves closer to the efficient quantity. deadweight loss decreases.
A)II only
B)I and II only
C)I and III only
D)I, II, and III

Question

Quizplus · Accepted Answer

When a subsidy is imposed on a market with a positive externality, it corrects the market failure by encouraging more of the beneficial activity. This increases total surplus, moves the market quantity closer to the efficient quantity, and decreases deadweight loss, making all three statements correct.

When a Subsidy Is Imposed on a Market with a Positive