Which of the following represents a way that a government can help the private market to internalize an externality?
A)taxing goods that have negative externalities
B)subsidizing goods that have positive externalities
C)The government cannot improve upon the outcomes of private markets.
D)Both a and b are correct.

Question

Quizplus · Accepted Answer

By taxing goods that have negative externalities, the government can increase their costs and incentivize individuals to decrease consumption. By subsidizing goods that have positive externalities, the government can increase their benefits and incentivize individuals to increase consumption. These actions can help the private market to internalize the costs and benefits associated with externalities. It is important to note that while the government can improve the outcomes of private markets in some cases, there may be situations where intervention could worsen outcomes.

Which of the Following Represents a Way That a Government