Suppose a Certain Good Conveys Either an External Cost or an External

question 8

True/False

Suppose a certain good conveys either an external cost or an external benefit. If the private cost of the last unit of the good that was produced is equal to the private value of that unit, then the sum of producer and consumer surplus is maximized.

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Definitions:

Primary Reinforcement

A naturally rewarding stimulus, such as food or water, that satisfies a basic biological need and hence reinforces a behavior directly.

Secondary Reinforcement

A process in conditioning where a stimulus reinforces a behavior after it has been associated with a primary reinforcer.

Variable Ratio Schedule

A reinforcement schedule used in conditioning where a response is reinforced after an unpredictable number of responses, leading to high and steady response rates.

Fixed Ratio Schedule

A type of reinforcement schedule in behavioral psychology where a response is reinforced only after a specified number of responses.