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If the consumption of a good generates external benefits for society as a whole, then: Select...

If the consumption of a good generates external benefits for society as a whole, then: Select one: A. The free market output is inefficient B. At the free market output, the marginal social benefit is greater than the marginal cost C. The government can subsidize consumption of the good and increase efficiency D. All of these answers are correct.

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Answer #1

If the consumption of a good generates external benefits for society as a whole, then

D. All of these answers are correct.

As a good such as education which generates positive externalities would generate an inefficient outcome where the marginal social benefit is greater than the marginal cost.In order to generate an efficient outcome where the marginal social benefit is = marginal social cost, the government subsidizes consumption of the good to increase the efficiency.

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