Which of the Following Illustrates the Principle of Second Best

question 85

Multiple Choice

Which of the following illustrates the principle of second best?

• A) The government imposes taxes on cigarettes and the tax revenue collected is used to pay for health care.
• B) The government decides to impose taxes on all automobiles rather than imposing a tax only on luxury automobiles.
• C) The government imposes a tax on a meat processing plant that equals the cost of cleaning the lake damaged by the waste discharged into the lake by the meat processor.
• D) A tax imposed on land, because this tax distorts economic decisions less than taxes on other factors of production.

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Definitions:

Goal Theory

First proposed by Ed Locke, goal theory is a fairly simple model of motivation based on the premise that people with goals work harder than people without goals. Beyond that, the theory suggests that not all goals are created equal, and that goals that are difficult and yet specific and concrete will motivate employees best.

Specific

Clearly defined or identified; precise or exact.

Difficult Goals

Goals that are challenging and require significant effort and resources to achieve, often leading to higher levels of motivation and performance.

Greatest Effort

The highest level of effort or dedication that an individual or group can provide towards completing a task or achieving a goal.