Suppose the Market-Equilibrium Quantity of Good X Is 5,000 Units

question 490

Multiple Choice

Suppose the market-equilibrium quantity of good x is 5,000 units and the socially-optimal quantity of good x is 4,000 units. Then

• A)the production of good x imposes external costs on society.
• B)the private value of good x exceeds the private cost of good x when 5,000 units are produced.
• C)the private cost of good x exceeds the private value of good x when 5,000 units are produced.
• D)the social cost of good x exceeds the private value of good x when 4,000 units are produced.

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Definitions:

Operant Chamber

Also known as a Skinner Box, it is a laboratory apparatus used to study animal behavior through operant conditioning.

Reinforcer

Any stimulus, which, when presented after a response, increases the likelihood of that response occurring again in the future.

Classical Conditioning

Acquiring knowledge through the process of linking an environmental stimulus with a naturally happening one.

Advertising Agency

A business or service dedicated to creating, planning, and handling advertising (and sometimes other forms of promotion) for its clients.