Which of the following best illustrates the use of cost-benefit analysis in determining subsidies for positive externalities?

Cost-benefit analysis helps decision-makers weigh the advantages and disadvantages of providing financial support, known as subsidies, for activities that create positive effects for society. For example, if a government considers giving money to a company that produces solar panels, they would look at the benefits, such as cleaner air and reduced energy costs for consumers, against the costs, like the amount of taxpayer money spent. By calculating these factors, they can decide if the subsidy is worth it and how much support to provide. If the benefits, like improved public health and environmental protection, greatly exceed the costs, it would make sense to offer a larger subsidy. This way, the government encourages activities that benefit everyone while ensuring that resources are used wisely.