In order to achieve a socially optimal level of output, goods that entail positive externalities should be:
A)required.
B)subsidized.
C)taxed.
D)deregulated.

Question

Quizplus · Accepted Answer

Goods that entail positive externalities produce wider benefits beyond the direct benefits to the consumers or producers. Subsidizing such goods, i.e., offering financial assistance or support, can effectively incentivize individuals or firms to produce or consume such goods, thereby increasing their social output to the optimal level. This is because subsidies lower the cost of the goods, making them more affordable and accessible to a larger portion of the population.

In Order to Achieve a Socially Optimal Level of Output