Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
To increase government revenue
B
To encourage the production of goods or services that have beneficial effects on third parties
C
To reduce the cost of living
D
To limit competition in the market
Understanding the Answer
Let's break down why this is correct
Answer
The primary purpose of providing subsidies for positive externalities in an economy is to encourage behaviors or activities that benefit society as a whole. Positive externalities are effects that help others, like education improving a community or clean energy reducing pollution. By offering financial support, the government can make these beneficial activities more affordable and attractive to individuals and businesses. For example, if a government gives subsidies to solar panel companies, more people might choose to install solar panels, leading to cleaner air and a healthier environment for everyone. This way, subsidies help to align private interests with the public good, promoting overall economic and social welfare.
Detailed Explanation
Subsidies help make things cheaper for producers. Other options are incorrect because Some might think subsidies are mainly for the government to earn money; It's a common belief that subsidies lower living costs directly.
Key Concepts
positive externalities
Topic
Subsidies for Positive Externalities
Difficulty
easy level question
Cognitive Level
understand
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