When a subsidy is imposed on a market with a positive externality, efficiency:
A)is not affected.
B)decreases.
C)increases.
D)drops to zero.

Name: When a subsidy is imposed on a market with a positive externality, efficiency: A)is not affected. B)decreases. C)increases. D)drops to zero.
Brand: Quizplus
Rating: 4.7 (29 reviews)

Question

Quizplus · Accepted Answer

Subsidies on markets with positive externalality help align private costs with social costs, thus increasing efficiency by encouraging more of the beneficial activity.

When a Subsidy Is Imposed on a Market with a Positive