Governments use subsidies ________.
A)as a means of increasing government spending
B)when they want to increase taxes
C)to achieve an efficient outcome in a market with external costs
D)to achieve an efficient outcome in a market with external benefits
E)and emission permits to achieve an efficient outcome in markets with external benefits

Question

Quizplus · Accepted Answer

Governments use subsidies to achieve an efficient outcome in a market with external benefits, such as providing incentives for businesses to invest in research and development or to subsidize the production of goods with positive externalities like education or public transportation. Subsidies can help align private incentives with social benefits, leading to a more efficient allocation of resources.

Governments Use Subsidies ________