Suppose That at Current Production Levels, a Major Corporation's Marginal

question 45

Multiple Choice

Suppose that at current production levels, A Major Corporation's marginal cost is $15, its marginal external cost is $5, and the marginal social benefit of production is $25. In this case, the corporation:

• A) is imposing too much harm on the environment and should cut back production.
• B) is producing the efficient amount.
• C) is producing an amount less than the efficient amount.
• D) could make society better off by decreasing production.

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Definitions:

Avoidance Behavior

Actions taken to prevent or evade a perceived negative outcome or noxious stimulus.

Escape Behavior

An action taken to terminate an ongoing, unpleasant, aversive stimulus.

Mowrer's Two-Factor Theory

A psychological theory that integrates classical and operant conditioning to explain avoidance learning and the development of phobias.

Escape Response

A behavioral response to an aversive event that is reinforced by the termination of the aversive event.