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:

Purging Behavior

Engaging in behaviors such as vomiting or misuse of laxatives to rid the body of food and calories, typically associated with eating disorders like bulimia nervosa.

Sexual Abuse

Any unwanted sexual activity forced upon one individual by another.

Drug Addiction

A chronic disorder characterized by the compulsive use of drugs, leading to severe physical or psychological dependence.

Bulimia

An eating disorder characterized by episodes of binge eating followed by behaviors to avoid weight gain, such as vomiting.