Kenneth Arrow Discussed Two Important Situations in Which Profit Maximization

question 19

Multiple Choice

Kenneth Arrow discussed two important situations in which profit maximization can be socially inefficient. One of these occurs when

• A) there is an imbalance of knowledge between buyer and seller.
• B) business would be an "inept custodian" of public values.
• C) firms are unwilling or simply refuse to maximize profits.
• D) corporate culture promotes dysfunctional social relations.

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Definitions:

Reinforcing Outcomes

Consequences that increase the probability of a behavior being repeated by providing a reward or removing a negative stimulus.

Admirable

Deserving respect or approval for qualities such as integrity, bravery, or skill.

Observational Learning

A process of learning that occurs through observing the behavior of others, modeling that behavior, and then imitating it.

Ignition Key

A key used to activate the ignition system of a vehicle, enabling the engine to start.