Multiple Choice
Suppose that elementary education creates a positive externality. If the government subsidizes education by an amount equal to the per-unit externality it creates, then
A) the equilibrium quantity of education will equal the socially optimal quantity of education.
B) the equilibrium quantity of education will be greater than the socially optimal quantity of education.
C) the equilibrium quantity of education will be less than the socially optimal quantity of education.
D) There is not enough information to answer the question.
Correct Answer:
Verified
Correct Answer:
Verified
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