📚 Learning Guide
Government Subsidies and Externalities
easy

If the government implements a subsidy for planting trees, what is the primary reason this action is taken?

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Choose the Best Answer

A

To increase the private costs of planting trees

B

To reduce the social costs associated with deforestation

C

To align the private costs of planting trees with the social benefits

D

To eliminate all market competition in tree planting

Understanding the Answer

Let's break down why this is correct

Answer

The government provides a subsidy for planting trees mainly to encourage people to take part in activities that benefit the environment. Planting trees helps reduce air pollution, improve air quality, and combat climate change, which are all good for society. However, individuals might not plant enough trees on their own because they don’t see the full benefits, as some advantages, like cleaner air, help everyone, not just the tree planter. By offering financial support, the government makes it more appealing for people to plant trees, leading to more trees being planted overall. For example, if a farmer receives money from the government for each tree they plant, they are more likely to plant more trees, which helps the environment for everyone.

Detailed Explanation

The government gives money to help plant trees because it wants to make it cheaper for people. Other options are incorrect because Some might think subsidies raise costs, but they actually lower them; This answer suggests subsidies are for reducing costs of deforestation.

Key Concepts

Government Subsidies
Externalities
Market Failures
Topic

Government Subsidies and Externalities

Difficulty

easy level question

Cognitive Level

understand

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