Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase the cost of production
B
To encourage the production of goods with societal benefits
C
To reduce government spending
D
To eliminate competition
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of government subsidies for positive externalities is to encourage activities that have beneficial effects on society but may not be profitable enough on their own. For example, when a company invests in renewable energy, it not only helps reduce pollution but also promotes a healthier environment for everyone. However, the company might not earn enough money just from selling clean energy, so the government can provide financial support or subsidies. This support makes it easier for the company to continue its work, leading to more clean energy and a cleaner planet. By using subsidies, the government helps ensure that these positive activities happen more often, benefiting the whole community.
Detailed Explanation
Subsidies help make things cheaper to produce. Other options are incorrect because Some might think subsidies raise production costs; It's a common mistake to think subsidies cut government spending.
Key Concepts
subsidies
Topic
Subsidies for Positive Externalities
Difficulty
easy level question
Cognitive Level
understand
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