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29 votes
29 votes
To correct for positive externalities, the government should

A. do nothing, since no harm is done by positive externalities

B. levy a tax on the output of the good or service

C. pay a subsidy equal to the marginal external benefit

D. impose a price ceiling on the good to discourage its production

E. impose a price floor on the good at which the marginal private benefit equals the marginal social cost

User Erik Asplund
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2 Answers

14 votes
14 votes

Answer:

C

Step-by-step explanation:

If you pay the subsidy to the externalities, the issues are solved.

User Frostrock
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2.8k points
23 votes
23 votes

Answer:

C. Pay a subsidy equal to the marginal external benefit

User Nikunj Kakadiya
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2.8k points