For a Government Subsidy on a Good with an External

Multiple Choice

For a government subsidy on a good with an external benefit to result in the efficient amount of output being produced, what must be done?

A) Private production and private consumption must both be directly subsidised.
B) The quantity demanded must be decreased to the efficient amount.
C) The government must produce the product.
D) Private production without the subsidy must be prohibited.
E) The size of marginal external benefit must be accurately determined.