The social costs associated with some policy initiative are
A) readily identified
B) described as the spending needed to compensate society for the resources used so that its utility level is maintained
C) must account for all price, output, and income effects linked to that initiative
D) all of the above
E) (b) and (c) only

Question

Quizplus · Accepted Answer

The social costs associated with a policy initiative include both direct and indirect costs. Indirect costs include price, output, and income effects, which makes option C correct. Social costs cannot be readily identified and require specific calculation and analysis, making option A incorrect. Option B is partially correct because social costs are not always compensated for through spending, but also through other forms of intervention, such as regulation or taxes. Therefore, option E is the best choice as it includes the correct options.

The Social Costs Associated with Some Policy Initiative Are