QUESTI 10 points Save Answer Give an example of a product wi

QUESTI 10 points Save Answer Give an example of a product with a positive externality. How would the government address this to correct the externality? TTT Aal3 (12pt) T.:-.-.? ?.q//, s Path: p Words:0 QUESTI 10 points Save Answer State and local sales taxes are often criticized for being regressive even though everyone pays the same rate regardless of income. Why might this be so? T T I Arial 3 (12pt Path Words:0

Solution

Answer 1:

Positive externality occurs when the consumption of production of good causes benefit to the third party. For example, education has positive consumption externality. It gives private benefit and also benefits rest of the society as an educated person can provide education to others in the society. The government can subsidize education to correct this externality because this will lead to more and more people in the society getting educated which is good for the individual person as well as for the entire society. Thus, the best way to correct education externality is subsidization of education.