In Section B, we show mathematically that the optimal subsidy will involve the government paying for half

Question:

In Section B, we show mathematically that the optimal subsidy will involve the government paying for half the cost of the fireworks if you and I have the same preferences. By thinking about the size of the externality (or how much of the total benefit is not taken into account by an individual consumer), does this make intuitive sense?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Question Posted: