When Positive Externalities Are Present, It Leads to an Underallocation

question 113

True/False

When positive externalities are present, it leads to an underallocation of resources in that area relative to that which is socially desirable.

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Definitions:

Excitation-Transfer Model

The expression of aggression is a function of learnt behaviour, some excitation from another source, and the person’s interpretation of the arousal state.

Arousal

A psychological and physiological state of being awake and reactive to stimuli.

Social Learning Theory

The view championed by Bandura that human social behaviour is not innate but learnt from appropriate models.

Vicarious Experience

Learning or feeling an emotional response through the experiences of another person, rather than through direct personal experience.