When a positive externality is present in a market, the imposition of a government subsidy ensures:
A)a fair distribution of surplus.
B)an efficient outcome.
C)that those who enjoy the benefit receive the surplus.
D)All of these are true.

Question

Quizplus · Accepted Answer

A government subsidy can correct for the underproduction that typically occurs in the presence of a positive externality by aligning private incentives with social benefits, leading to a more efficient market outcome.

When a Positive Externality Is Present in a Market, the Imposition