When the Government Uses a Subsidy in the Case of a Positive

question 51

Multiple Choice

When the government uses a subsidy in the case of a positive externality, it sets the subsidy equal to the

• A)product of the marginal social benefit and the private benefit of the good providing the externality.
• B)difference between the marginal private benefit and the marginal social benefit of the good providing the externality.
• C)sum of the marginal social benefit and the private benefit of the good providing the externality.
• D)difference between the marginal social benefit and the marginal private benefit of the good providing the externality.
• E)difference between the marginal social benefit and the marginal social cost of the good providing the externality.

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Definitions:

Important Decisions

Choices that have a significant impact on an individual's life or circumstances.

Trivial Incidents

Events or occurrences that are of little importance, insignificant in scale or consequence.

Rene Descartes

A 17th-century French philosopher, mathematician, and scientist who is often referred to as the father of modern philosophy.

Authority Structure

The framework within which power and control are distributed and exercised within an organization or society.