ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Increasing supply The supply goods and services that generate external benefits can be raised if the government provides grants and subsidies to producers which will reduce costs of production, and encourage more supply.

Detailed explanation-2: -Government can play a role in encouraging positive externalities by providing subsidies for goods or services that generate spillover benefits. A government subsidy is a payment that effectively lowers the cost of producing a given good or service.

Detailed explanation-3: -A positive externality is a benefit of producing or consuming a product. For example, education is a positive externality of school because people learn and develop skills for careers and their lives. In comparison, negative externalities are a cost of production or consumption.

Detailed explanation-4: -Taxes are one solution to overcoming externalities. To help reduce the negative effects of certain externalities such as pollution, governments can impose a tax on the goods causing the externalities.

Detailed explanation-5: -One example of a positive externality is the market for education. The more education a person receives, the greater the social benefit since more educated people tend to be more enterprising, meaning they bring greater economic value to their community.