Suppose that the purchase of a good creates a positive marginal external benefit. Given this, which of the following statements is NOT true?

Question

Quizplus · Accepted Answer

When a good creates a positive marginal external benefit, the socially optimal level of consumption is higher than the free-market equilibrium. To reach the socially optimal level, the government would typically subsidize the purchase of the good, not tax it. Taxes are used to correct negative externalities, not positive ones.

Suppose That the Purchase of a Good Creates a Positive