What would happen if the government subsidized consumption of this product because it has positive externalities in consumption

If a product has postive externalities, it means that it benefits society in some way that is not reflected in the product's price, supply and demand.

Explanation:

This causes economic distortion in which the possible benefit of the product are less than ideal.

For this reason, governments can subsidize goods and services that have postiive externalities, with the effect of bringing about the full benefit of the good or service to society.

A typical example is education, which is not a product, but a service. Education has a lot of positive externalities: it makes societies more educated and productive, even more peaceful. This is why the government heavily subsidizes education, both in primary, secondary, and tertiary levels.

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