A government decides to impose a subsidy on electric vehicles. Which of the following outcomes best illustrates the concept of allocative efficiency as it pertains to this intervention?

Allocative efficiency happens when resources are distributed in a way that maximizes the overall benefit to society. When the government imposes a subsidy on electric vehicles, it makes them more affordable, encouraging more people to buy them. This increase in electric vehicle sales can lead to reduced pollution and lower greenhouse gas emissions, benefiting the environment and public health. For example, if more families choose electric cars instead of gasoline ones due to the subsidy, we see a better allocation of resources that aligns with society's goal of a cleaner environment. Thus, the subsidy helps achieve allocative efficiency by promoting the production and consumption of goods that provide greater social benefits.