Question

Three ways governments can encourage production of goods with external benefits are

A) private subsidies, pollution permits, and intellectual property rights.
B) private subsidies, pollution permits, and vouchers.
C) intellectual property rights, pollution permits, and vouchers.
D) taxes, emission charges, and pollution permits.
E) private subsidies, vouchers, and intellectual property rights.

Answer 1

Governments can encourage production of goods with external benefits through private subsidies, pollution permits, and intellectual property rights.

Step-by-step explanation:

Three ways governments can encourage production of goods with external benefits are:

1. Private subsidies: Governments can provide financial support to businesses that produce goods with external benefits, such as renewable energy companies.
2. Pollution permits: Governments can issue permits that limit the amount of pollution a company can emit. By requiring companies to buy these permits, it creates a financial incentive to reduce pollution.
3. Intellectual property rights: Governments can protect the exclusive rights of inventors and creators, which encourages innovation and investment in new technologies.