Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A→B→C→D
B
B→A→C→D
C
D→C→B→A
D
A→C→B→D
Understanding the Answer
Let's break down why this is correct
Answer
To understand how subsidies for positive externalities can improve market efficiency, we start with the government providing a subsidy to producers. This financial support encourages producers to create more goods or services that have positive effects on society, like education or renewable energy. As a result, the supply curve shifts to the right, meaning that more products are available at lower prices. With increased production, the market then aligns with what is best for society, known as the socially optimal output. Finally, consumers benefit from these lower prices and greater access to the products, leading to overall economic improvement and satisfaction.
Detailed Explanation
First, the government gives money to producers. Other options are incorrect because This option suggests that the supply curve shifts before the government gives a subsidy; This option puts the socially optimal output before the supply curve shifts.
Key Concepts
Subsidies for Positive Externalities
Market Efficiency
Supply Curve
Topic
Subsidies for Positive Externalities
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.