(Table: The Marginal Social Benefit of Computer Chips)Use Table: The Marginal Social Benefit of Computer Chips.The production of computer chips generates an external benefit in the form of a technology spillover.If the marginal social benefit is indicated by MSB,the optimal Pigouvian subsidy is equal to $10.

Pigouvian Subsidy

A financial incentive given by a government to encourage activities that have positive externalities or beneficial effects on society that are not fully compensated in the market.

Marginal Social Benefit

The supplementary benefit to the community achieved by consuming or producing an extra unit of a good or service.

Computer Chips

Small electronic components that perform various computing functions within digital devices.