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e-lub [12.9K]
4 years ago
11

If the production of a product or service involves external benefits, then the government can improve efficiency in the market b

y:
(A) Imposing a corrective tax to correct for an overallocation of resources
(B) Imposing a corrective tax to correct for an underallocation of resources
(C) Providing a subsidy to correct for an underallocation of resources
(D) Providing a subsidy to correct for an overallocation of resources
Social Studies
1 answer:
kakasveta [241]4 years ago
6 0

Answer:

The correct answer is:

(C) Providing a subsidy to correct for an underallocation of resources

Explanation:

Similar to what occurs with the public institutions of education, if the good or service offers a general benefit for the society, it could be possible for the government to offer a subsidy in order to avoid an underproduction that would affect the benefits that society is enjoying thanks to the mentioned production. The idea of the government in this case, would be to avoid the underallocation of the necessary resources.

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