APFIVE Correcting Positive Externalities
In an imperfectly competitive market with a positive externality, which government intervention would lead to a more socially efficient outcome?
A
By imposing tariffs on imports that match marginal externalities and correct domestic distortions.
B
By introducing taxes equaling marginal external benefits that lead producers towards efficient outcomes.
C
By subsidizing production which encourages increased output closer to socially optimal levels.
D
By setting maximum quotas on production that align private costs with social benefits.
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