When Markets Don't Align Self-Interest with Social Interest

question 40

Multiple Choice

When markets don't align self-interest with social interest:

• A) markets will still manage to reach an efficient outcome.
• B) governments may improve the situation by changing incentives.
• C) societal costs will always exceed individual benefits.
• D) individual benefits will exceed societal benefits.

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Definitions:

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, famously demonstrated by Ivan Pavlov.

Cognitive Therapy

A form of psychotherapy that emphasizes the importance of thought patterns in how we feel and what we do.

Psychodynamic

A psychological theory or approach that emphasizes the systematic study of the psychological forces that underlie human behavior, feelings, and emotions and how they might relate to early experience.

Behavior Therapy

A form of psychotherapy that focuses on changing maladaptive or harmful behaviors through the application of learning principles.