State and local governments subsidize college students with grants and low-interest loans.The loans and subsidies are examples of
A)positive externalities.
B)Coase subsidies.
C)Pigovian subsidies.
D)emission allowances.

Question

Quizplus · Accepted Answer

The grants and low-interest loans provided by state and local governments to college students are examples of Pigovian subsidies, which are subsidies meant to encourage the consumption or production of certain goods or services that are believed to have positive externalities, such as education. Such subsidies are meant to correct market failures, such as underinvestment in education due to the inability of individuals to fully capture the social benefits of their education. Coase subsidies are payments made to parties that reduce negative externalities, while emission allowances are permits given to companies to emit a certain amount of pollutants.

State and Local Governments Subsidize College Students with Grants and Low-Interest