Governments can use subsidies
A) as a means of increasing government spending.
B) when they want to increase taxes.
C) to achieve an efficient outcome if there are external costs.
D) to achieve an efficient outcome if there are external benefits.

Question

Quizplus · Accepted Answer

Subsidies can be used to encourage activities that have positive externalities, or external benefits, leading to a more efficient allocation of resources.

Governments Can Use Subsidies