Which of the following responses to a positive externality enhances society's welfare?
A)taxes
B)subsidies
C)effluent fees
D)quotas
E)a cut in funding

Question

Quizplus · Accepted Answer

Subsidies will incentivize the production or consumption of the good that creates the positive externality, resulting in an increase in its output and consumption. This will lead to an even larger positive externality, resulting in a greater increase in social welfare.

Which of the Following Responses to a Positive Externality Enhances