Consider Two Goods--One That Generates External Benefits and Another That

question 70

Multiple Choice

Consider two goods--one that generates external benefits and another that generates external costs. A competitive market economy would tend to produce

• A) too much of both goods.
• B) too little of both goods.
• C) too much of the good that generates external benefits and too little of the good that generates external costs.
• D) too little of the good that generates external benefits and too much of the good that generates external costs.

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Definitions:

Gestalt Psychology

A psychological theory that proposes the human mind perceives objects as wholes before recognizing their individual parts.

Wertheimer

A psychologist and one of the founders of Gestalt psychology, known for his work on perception and problem-solving.

Functionalist

In psychology, a perspective that emphasizes the purpose and adaptive functions of mental and behavioral processes.

Psychoanalytic

A method of psychology and therapy developed by Sigmund Freud, focusing on unconscious motives and conflicts.