Which of the Following Would Be an External Cost to the Consumption

question 161

Multiple Choice

Which of the following would be an external cost to the consumption of cigarettes?

• A) Price of a pack of cigarettes.
• B) Loss of income resulting from extra missed days of work.
• C) Higher life insurance premiums due the practice of smoking.
• D) The loss in utility received because the smoker must stand outside her office building in the winter to smoke.
• E) Increased risk of cancer to the nonsmoking passengers in the smoker's carpool.

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Definitions:

Reasonable Time

A period of time that is legally accepted as sufficient or suitable under the circumstances.

Demand Instrument

A financial document that requires payment to the holder on demand or at a pre-defined time.

Secondary Party

An individual or entity indirectly involved in a legal agreement or crime, not the principal actor or participant.

Unconditional Promise

A commitment that does not depend on any conditions to be fulfilled; it is absolute and unequivocal.