When government intervenes in the production process because external benefits exist, it typically attempts
A) to impose a tax on each unit produced.
B) to shift the market's demand curve to the left.
C) to shift the market's demand curve to the right.
D) to shift the market's supply curve to the left.

Question

Quizplus · Accepted Answer

When external benefits exist, such as in the case of production of vaccines, the government intervenes to increase production in the market. To achieve this, the government would aim to shift the market's demand curve to the right, which can be done through public awareness campaigns or subsidies that increase the affordability of the product. This will result in an increase in both the quantity and price of the product produced, which can benefit society as a whole.

When Government Intervenes in the Production Process Because External Benefits