Uni-Go Company makes motorized unicycles. Uni-Go is deciding whether to include a safety feature that would cost $6 for each unicycle
Uni-Go estimates the probability of death without the safety feature is 1/90,000 and the death cost per unicycle is $5.55. Uni-Go's cost-benefit recommendation is to A) add the safety device.
B) not add the safety device.
C) add the safety device plus additional safety devices.
D) not produce the unicycle.
B
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Economists study
A) the choices people make, but not the consequences of their choices. B) the consequences of peoples' choices, but not the choices themselves. C) the choices people make in a world where resources are scarce. D) theories and ignore all the facts. E) data rather than people.
When the production of a good creates an external cost, one method of achieving the efficient allocation is to impose a tax such that
A) MC + tax = MSC. B) MC - tax = MSB. C) MB + tax = MSC. D) MB - tax = MSB.