Assume That the Production of a Good Imposes External Costs

question 112

Multiple Choice

Assume that the production of a good imposes external costs upon third parties. If the price and quantity of this good is set by supply and demand the price will be too:

• A) high and quantity too low for efficient resource allocation.
• B) low and quantity too low for efficient resource allocation.
• C) low and quantity too high for efficient resource allocation.
• D) high and quantity too high for efficient resource allocation.

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Definitions:

Negative Reinforcement

A behavioral conditioning technique where the removal of an unpleasant stimulus strengthens a behavior.

Praises

Expressions of approval, commendation, or admiration.

Observational Learning

The method of adopting behaviors by monitoring and copying others.

Classical Conditioning

A learning process that involves pairing a previously neutral stimulus with an unconditioned stimulus to elicit a conditioned response.