In order to increase society's well-being, a process that produces a positive externality might be
A)taxed to discourage production
B)subsidized to encourage production
C)taxed to encourage production
D)subsidized to discourage production
E)provided without government intervention

Question

Quizplus · Accepted Answer

A process that produces a positive externality benefits society as a whole, not just the producer. Therefore, without any intervention, the producer may not produce this product to its full potential. By subsidizing the production of this process, the government encourages the producer to produce more, which leads to an increase in society's well-being.

In Order to Increase Society's Well-Being, a Process That Produces