Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Subsidies can help align private production levels with socially optimal output.
B
Subsidies always lead to overproduction in the market.
C
The use of subsidies can shift the supply curve to the right.
D
Subsidies primarily benefit producers rather than consumers.
E
Positive externalities can include benefits like improved public health from vaccinations.
Understanding the Answer
Let's break down why this is correct
Answer
Subsidies for positive externalities are financial support given by the government to encourage activities that have beneficial effects on society. For example, if a company invests in renewable energy, the government might provide a subsidy to help lower its costs. This support can lead to more businesses choosing to adopt environmentally friendly practices because they see the financial benefit. By offering subsidies, the government aims to increase the overall good that comes from these activities, like cleaner air or improved public health. Therefore, statements that highlight how subsidies can encourage positive actions and lead to greater benefits for society are true.
Detailed Explanation
Other options are incorrect because Some people think subsidies always help match private and social benefits; It's a common belief that subsidies always cause too much production.
Key Concepts
Subsidies for Positive Externalities
Market Efficiency
Supply and Demand
Topic
Subsidies for Positive Externalities
Difficulty
medium level question
Cognitive Level
understand
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