A subsidy is sometimes used by the government to correct the problems associated with
A) negative externalities.
B) positive externalities.
C) public goods.
D) monopolies.

Question

Quizplus · Accepted Answer

Subsidies are often used to encourage activities or industries that generate positive externalities, which are benefits to society that are not captured by the market price. For example, education and healthcare can have positive effects on society beyond the individual beneficiaries, so governments may provide subsidies to promote increased provision or consumption of these services.

A Subsidy Is Sometimes Used by the Government to Correct