Final answer:
The correct answer is False. The fallacy of composition is falsely applied when saying that individual interests always benefit the group, and it is false that the group as a whole is made better off by individual pursuits alone. The tragedy of the commons and collective action problems are examples of such fallacies in action. The Three-Fifths Compromise is an example of collective decision-making relating to representation and taxation.
Step-by-step explanation:
The statement 'The fallacy of composition states that the group as a whole is made better off as individuals pursue their own best interests' is false. The fallacy of composition is a logical error that assumes what is true for individual members of a group will be true for the group as a whole. This fallacy can have significant implications in social studies and economics when analyzing collective behavior. One such implication is illustrated in the concept known as the tragedy of the commons, where individual stakeholders acting in their own self-interest consume or deplete a shared resource, leading to its eventual destruction, which is detrimental to the group.
Collective action problems are more nuanced. In certain situations, individuals acting in self-interest can create incentives that harm the entire group and even themselves in the long run. This demonstrates the complex interplay between individual and group interests in collective decision-making, highlighting the potential need for regulation or intervention to balance these interests.
An example in history would be the Three-Fifths Compromise, which is often misconstrued. The compromise was indeed about representation and taxation, indicating that the statement 'The Three-Fifths Compromise dealt with the issue of representation and taxation' is true. This was a specific historical resolution to a collective decision-making problem faced by the early United States, where the issue at hand was how enslaved individuals would be counted for the purposes of both taxation and legislative representation.