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In the US the process for getting and keeping a driver’s license is as follows: Study the law à Get learner’s permit à Practice driving à Driver’s test, get license à Driveà Accident or get a ticketà Results (e.g., temporary loss of license) à drive à accident à drive à get old and stop driving. In some places there is a test for proficiency at an older age such as 70; in others there is none. Analyze the above system from the perspective of quality costs. How does this system maintain driver quality (meaning drivers who don’t get into accidents)? What are the prevention and appraisal costs that this system incurs?How do they compare (in magnitude) with internal and external costs?If you were redesigning the system to improve driver quality without raising total system costs, what would you change? (Note that in this as inmany otherservices, the customers (the drivers) are also part of the production process. So you can call “internal failure costs” the costs borne by the government plus the bad driver. External failure costs are costs that affect other drivers.)
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