Which of the Following Statements Is TRUE

question 193

Multiple Choice

Which of the following statements is TRUE?
I. If an activity creates an external cost of $15, the government should subsidize the activity by $15.
II. Social surplus is maximized when the private marginal benefit equals the social cost.
III. External costs result in markets producing too much output.
IV. Someone pays external costs other than the producer or consumer.

• A) I and III only
• B) II, III, and IV only
• C) III only
• D) II and IV only

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Definitions:

Dehumanization

Occurs when bureaucracies treat clients as standard cases and personnel as cogs in a giant machine. This treatment frustrates clients and lowers worker morale.

Bureaucracies

Complex organizational structures with fixed rules, a hierarchy of authority, and a full-time administrative staff, designed to coordinate and control the work of many individuals.

Bureaucratic Inertia

Refers to the tendency of large, rigid bureaucracies to continue their policies even when their clients' needs change.

Bureaucratic Ritualism

The phenomenon in which bureaucratic organizations focus more on following strict procedures and rules than on achieving their actual goals, leading to inefficiency.