Which of the following statements accurately describe the role of government subsidies in addressing externalities? Select all that apply.

Government subsidies are financial support given by the government to encourage certain activities or behaviors, especially when there are externalities involved. An externality is a situation where the actions of one party affect others who did not choose to be involved, like pollution from a factory affecting nearby residents. By providing subsidies, the government can promote positive externalities, such as encouraging companies to invest in clean energy, which benefits everyone by reducing pollution. For example, if a solar panel company receives a subsidy, it can lower its prices, making it easier for more people to switch to renewable energy and help the environment. In this way, subsidies help align private interests with the public good, reducing the negative impacts of externalities.