If education produces positive externalities, we would expect:

A. the government to tax education.

B. colleges to relax admission requirements.

C. people to realize the benefits, which would increase the demand for education.

D. the government to subsidize education.

D. Government to subsidize education

Explanation:

Externalities reflect benefit / harm to third party, without being reflected in price. These can be positive (beneficial) / negative (harmful), egs - wildlife sancturies and pollution respectively.

Positive Externalities : Total Benefit to society > Private benefit to the person consuming [Total Benefit = Private Benefit + Social Benefit]. Negative Externalities : Total Cost to Society > Private Cost beared by person consuming [Total Cost = Private Cost + Social Cost]

Positive externalities' extra social benefit & negative externalities' extra social cost are not reflected in their price. So, govt increases tax on negative externalities (to accomodate extra social cost) & subsidises positive externalities (to accomodate extra social benefit). This makes correction of underproduction of positive externalities & over production of negative externalities (based on private Benefit = Cost equalisation).

Education is a positive externality because it doesn't only create benefit (private) for the person consuming, but also creates extra social awareness benefits. Hence, as per the above explanation : education being a positive externality, would be subsidized.