Question

Subsidies to promote research into health and energy innovations is an example of an approach to positive externality.

True

False

Answer 1

True

Explanation:

Innovations into health and energy not only benefits the the person or organisation who are working on research and development but also huge population who use the the ultimate service provided by them. Hence research and development gives benefit to the third party and has positive externality. A subsidy in the area of research and development will give motivation and incentive to do research and innovations. And this research and innovations will have not only private benefit but also social benefit.