A Positive Externality Exists and Government Wants to Impose a Subsidy

question 49

Multiple Choice

A positive externality exists and government wants to impose a subsidy in order to bring about an efficient outcome.To accomplish its objective,government must set the subsidy equal to marginal

• A) private cost.
• B) social benefit.
• C) external cost.
• D) social cost.
• E) external benefit.

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Definitions:

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