A Positive Externality Exists and Government Wants to Apply a Per-Unit

Multiple Choice

A positive externality exists and government wants to apply a per-unit subsidy in order to bring about an efficient outcome. Under what condition will the solution (the subsidy) be worse than the problem (the market failure) ?

A) Under the condition that the subsidy is greater than the marginal external benefit (associated with the positive externality) .
B) Under the condition that the post-subsidy output is not farther away from the efficient level of output than the pre-subsidy output is from the efficient level of output.
C) Under the condition that the post-subsidy output is farther away from the efficient level of output than the pre-subsidy output is from the efficient level of output.
D) Under the condition that the subsidy is less than the marginal external benefit (associated with the positive externality) .