-The government might provide a subsidy when
A) a negative externality exists.
B) an effluent fee has been unsuccessful.
C) it wants to increase the amount of a good consumed.
D) it wants to transform a negative externality into a positive externality.

Question

-The government might provide a subsidy when
A) a negative externality exists. 
B) an effluent fee has been unsuccessful. 
C) it wants to increase the amount of a good consumed. 
D) it wants to transform a negative externality into a positive externality.

Quizplus · Accepted Answer

Subsidies are often provided by governments to increase the consumption of goods that are deemed beneficial or necessary for the public or the economy. This can include goods that have positive externalities, such as education or renewable energy, where the social benefits exceed the private benefits.

-The Government Might Provide a Subsidy When