Question

A Pigovian subsidy __________.

ensures that external costs are minimized

is set equal to the marginal external benefit of an activity

does not exist outside of economic theories

exists when marginal social benefits exceed marginal social costs
GPT-4o mini
A Pigovian subsidy **is set equal to the marginal external benefit of an activity**.

Pigovian subsidies are designed to encourage activities that generate positive externalities, essentially providing financial support to align private incentives with social benefits.

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