When Production Creates External Costs Greater Than External Benefits,a Market

question 42

Multiple Choice

When production creates external costs greater than external benefits,a market is:

• A) not producing the product without government intervention.
• B) producing a socially optimal quantity of the product.
• C) allocating too few resources to production of the product.
• D) allocating too many resources to production of the product.

---

Definitions:

Punishment

The imposition of a penalty as a response to an undesirable behavior or action, aimed at reducing or eliminating that behavior.

Operant Conditioning

is a learning process through which the strength of a behavior is modified by reinforcement or punishment.

Classical Conditioning

A learning process in psychology where an automatic conditioned response is paired with a specific stimulus, originally discovered by Ivan Pavlov.

Law of Effect

A psychological principle stating that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are less likely to be repeated.