If a government desires to increase production beyond the current competitively determined efficient level, the government should:

Question

Quizplus · Accepted Answer

Subsidizing the good at a price higher than its current price would incentivize producers to increase production beyond the current efficient level as they will receive a higher price for their goods. This would also result in lower prices for consumers, which is a desired outcome of government intervention. The other options such as taxing the good, setting the price below its current price, or imposing a fixed fee will likely decrease production and result in higher prices for consumers.

If a Government Desires to Increase Production Beyond the Current