When the Government Uses a Subsidy in the Case of a Positive

Multiple Choice

When the government uses a subsidy in the case of a positive externality, it sets the subsidy equal to the

A) product of the marginal social benefit and the private benefit of the good providing the externality.
B) difference between the marginal private benefit and the marginal social benefit of the good providing the externality.
C) sum of the marginal social benefit and the private benefit of the good providing the externality.
D) difference between the marginal social benefit and the marginal private benefit of the good providing the externality.
E) difference between the marginal social benefit and the marginal social cost of the good providing the externality.