An Underallocation of Resources Occurs When

question 13

Multiple Choice

An underallocation of resources occurs when

• A) marginal private benefit exceeds marginal social benefit.
• B) a negative externality in production exists.
• C) a positive externality in consumption exists.
• D) All of these will lead to underallocation of resources.

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Definitions:

Empirical Evidence

Information obtained through observation or experimentation that serves as the basis for knowledge or justification.

Protective Strategy

A method or approach designed to safeguard or defend against potential threats, dangers, or undesirable outcomes.

Denial

A defense mechanism in which confrontation with a personal problem or with reality is avoided by denying the existence of the problem or reality.

Repression

A defense mechanism where undesirable thoughts, feelings, or urges are unconsciously pushed out of conscious awareness.