In markets with positive externalities, the government should attempt to ________ activity by using ______.
A) decrease; taxes
B) increase; tax breaks
C) increase; fines
D) decrease; taxes.

Question

Quizplus · Accepted Answer

In markets with positive externalities, the government should attempt to increase activity because positive externalities result in beneficial effects on third parties not involved in the transaction. Tax breaks are a form of incentive to encourage more of the activity that generates positive externalities.

In Markets with Positive Externalities, the Government Should Attempt to ________