State and local governments subsidise university students with grants and low-interest loans.The loans and subsidies are examples of
A)positive externalities.
B)Coase subsidies.
C)Pigovian subsidies.
D)emission allowances.

Question

Quizplus · Accepted Answer

The loans and subsidies provided to university students by state and local governments are examples of Pigovian subsidies. These subsidies are provided to correct market failures and externalities by providing financial support to those who might not otherwise be able to afford higher education. In this case, by providing subsidies for university education, the government is addressing the negative externality of underinvestment in education that may occur if students cannot afford to attend college.

State and Local Governments Subsidise University Students with Grants and Low-Interest