One way that the government encourages the production of a good with positive externalities is to offer
A) an effluent fee.
B) a market to pollute.
C) a subsidy.
D) a pollution tax.

Question

Quizplus · Accepted Answer

A subsidy is a payment made by the government to producers of a good or service to encourage its production. This can be used to encourage production of goods with positive externalities, as the market may not provide enough incentive to produce them on their own. The subsidy can help offset some of the costs of production and increase the supply of the good, benefiting society as a whole.

One Way That the Government Encourages the Production of a Good