If production of a good results in positive externalities, the corresponding market failure can be corrected by taxing consumers of the good.

Name: If production of a good results in positive externalities, the corresponding market failure can be corrected by taxing consumers of the good.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Taxing consumers would decrease demand, worsening the underconsumption issue caused by positive externalities. Instead, subsidies or incentives should be used to encourage consumption.

If Production of a Good Results in Positive Externalities, the Corresponding