To Encourage Consumption of a Good That Generates a Positive

Multiple Choice

To encourage consumption of a good that generates a positive externality, the BEST option for policymakers is to:

A) penalize firms through higher taxes unless they produce the socially optimal level of output.
B) mandate consumption of the good at the socially optimal level of output.
C) provide a subsidy to firms for each unit of the good consumed to achieve the socially optimal level of output.
D) allow the market to reach equilibrium on its own.