Suppose the Production of a Good Results in Positive Externalities

question 168

Multiple Choice

Suppose the production of a good results in positive externalities. If output occurs at the intersection of the supply curve and the marginal social benefits curve, then

• A)the socially optimal level of output will be produced.
• B)society will incur a net social cost.
• C)society will want less produced, and producers will be willing to satisfy that desire.
• D)there is market failure.

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Definitions:

Vroom's Expectancy Theory

A theory that explains motivation in terms of individuals' expectations about their ability to perform tasks and receive desired rewards.

Motivated

Being driven or encouraged to act or engage in an activity due to internal or external factors.

Effort

The amount of physical or mental energy put into a task or activity.

Performance

The act of carrying out or completing tasks or functions; often measured in terms of efficiency, effectiveness, and productivity.