In the Presence of Significant Externalities, a Market Equilibrium Maximizes

question 204

Multiple Choice

In the presence of significant externalities, a market equilibrium maximizes:

• A) social surplus.
• B) nothing.
• C) consumer surplus plus producer surplus plus everybody else's surplus.
• D) consumer surplus plus producer surplus.

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Definitions:

Victor Vroom

Victor Vroom is known for his work on expectancy theory, which suggests that individual motivation is influenced by expected outcomes and the value placed on those outcomes.

Expectancy Theory

A motivational theory suggesting that individuals are motivated to perform or behave in a certain way if they believe that their actions will lead to a desired outcome.

Employee Motivation

The array of internal and external factors that stimulate workers to take actions towards achieving personal and organizational goals.

Frederick Herzberg

An American psychologist famous for introducing the two-factor theory of motivation, identifying factors that cause job satisfaction and dissatisfaction.