Which of the Following Would Be an External Cost Associated

question 20

Multiple Choice

Which of the following would be an external cost associated with the manufacture of cigarettes?

• A) Price of a pack of cigarettes.
• B) Price of leaf tobacco.
• C) Cost to the government of the hospital expenses of indigent smokers.
• D) Cost to the employer of the higher health insurance premiums due to the hiring of a smoker.
• E) Cost to the employer of the extra effort lost due to the increased missed days of work as a result of smoking.

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Definitions:

Average Tax Rate

The percentage of total income that is paid in taxes, calculated by dividing the total tax paid by the taxpayer's total income.

Interest Income

Earnings received from deposit accounts or investments through the payment of interest.

Eligible Dividends

Dividends that are designated by a corporation to be eligible for a lower tax rate for the receiver, depending on jurisdiction.

Average Tax Rate

The percentage of total income that goes to taxes, calculated by dividing the total amount of tax paid by the total income.