This is about positive externality. From the information given (in the attached),
- The Market equilibrium is 3 pizza rolls
- The Market price is $7
- The Optimal Quantity is 5 pizza rolls
What should the government do in order to ensure that the market produces at optimal efficiency?
In order to ensure that the market produces at optimal efficiency, the government must Impose corrective subsidies.
How big should the subsidies be?
Subsidy = 11-7
= $4
As a result of the positive externality of the market produced the optimal amount. (Option B)
What is positive externality?
A positive externality occurs when a benefit is passed on to a third party.
Negative externalities can be discouraged by charging goods and services that cause spillover costs.
Learn more about positive externality at;
https://brainly.com/question/477170
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