-The government should subsidize the production of goods which generate a positive externality.

Question

Quizplus · Accepted Answer

Goods that generate a positive externality, such as education or public health initiatives, provide benefits to the wider society beyond the direct consumers. Subsidizing their production can help ensure they are produced in socially optimal quantities, addressing the market failure that occurs when the market underproduces these goods due to not accounting for their external benefits.

-The Government Should Subsidize the Production of Goods Which Generate