Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They can lead to market failure.
B
They may encourage increased production of beneficial goods.
C
They reduce government spending.
D
They eliminate all negative externalities.
Understanding the Answer
Let's break down why this is correct
Answer
One potential benefit of government subsidies aimed at promoting positive externalities is that they encourage activities that have a good impact on society. For example, when the government gives financial support to renewable energy projects, it helps reduce pollution and combat climate change, which benefits everyone. This financial help can make it easier for companies to invest in cleaner technologies, leading to more jobs and a healthier environment. By promoting these positive activities, subsidies can create a ripple effect that improves overall quality of life. In this way, government support not only helps specific businesses but also supports the greater good for the community.
Detailed Explanation
Subsidies help lower the cost of making good things, like clean energy. Other options are incorrect because Some might think subsidies cause problems in the market; It's a common belief that subsidies save money for the government.
Key Concepts
government intervention
policy effectiveness.
Topic
Subsidies for Positive Externalities
Difficulty
medium level question
Cognitive Level
understand
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