Which of the following would be an external cost in the market for cigarettes?
a. price of a pack of cigarettes
b. loss of income for the smoker resulting from extra missed days of work
c. higher life insurance premiums paid by the smoker due to smoking
d. loss in utility in smoking by the smoker because the smoker must stand outside her office building in the cold winter to smoke
e. increased risk of cancer to the nonsmoking passengers in the smoker's car pool
E
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A policymaker would prefer that the lag in the effect of a policy be
A) long and variable in magnitude or size. B) short and fixed in magnitude or size. C) long and fixed in magnitude or size. D) short and variable in magnitude or size.
Air fares are generally lower on Tuesdays and Wednesdays each week. What is a likely explanation for this occurrence?
A. Supply is relatively variable, and lower demand on these days leads to a lower equilibrium price. B. Demand is relatively variable, and lower supply leads to a lower equilibrium price. C. Lower levels of both supply and demand on these days lead to a lower equilibrium price. D. Supply is relatively fixed, and lower demand on these days leads to a lower equilibrium price. E. Demand is relatively fixed, and lower supply leads to a lower equilibrium price.