Final answer:
Subsidies are used to lower the cost of goods and services that provide social benefits, encouraging their consumption and spreading positive externalities such as better public health and higher education levels.
Step-by-step explanation:
Subsidies are used to spread positive externalities by reducing the cost of beneficial actions or services, thereby encouraging More consumption that leads to social benefits. For instance, by providing a subsidy for flu shots, the government enables more people to afford vaccinations. This not only protects the individuals who get the shots but also helps to create herd immunity, reducing the likelihood of disease spread and benefitting society as a whole. Similarly, subsidies for education can help realize the social returns on investment such as improved health outcomes, lower crime rates, and a more stable democracy. This is because education not only benefits the individual but also contributes to the wellbeing of society, exemplifying a positive externality.