Assuming a government's goal is to benefit society as much as possible, actions with negative externalities should be Multiple choice question. neither encouraged nor discouraged by policy makers. Reason: Assuming government can improve the situation, it can discourage actions with negative externalities to improve welfare. legalized by policy makers. Reason: Negative externalities are unintended consequences and cannot be either legalized or prohibited. However, actions leading to externalities can be prohibited. encouraged by policy makers. Reason: Encouraging negative externalities will result in greater welfare loss. discouraged by policy makers. correct Correct Answer discouraged by policy makers. Need help? Review these concept resources