The outcome from a voucher scheme is efficient when the government makes the value of the voucher equal to
A) marginal external cost.
B) marginal external benefit.
C) external cost.
D) external benefit.

Question

Quizplus · Accepted Answer

The government should make the value of the voucher equal to the marginal external benefit to ensure that the outcome from the voucher scheme is efficient. This is because the marginal external benefit represents the additional benefit that accrues to society as a whole from the consumption of the good or service, and by setting the value of the voucher equal to this amount, the government can encourage individuals to consume the optimal amount of the good or service, taking into account both the private and external benefits.

The Outcome from a Voucher Scheme Is Efficient When the Government