Which of the Following Statements Is TRUE

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