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:

Derived Demand

A demand for a factor of production or intermediate good that occurs as a result of the demand for another good or service, for example, the demand for steel being derived from the demand for automobiles.

Lithium Ion Batteries

Rechargeable batteries that use lithium ions as the primary component of their electrolyte, known for their high energy density and used in various electronic devices and electric vehicles.

Tesla Automobiles

Tesla Automobiles refers to electric vehicles and clean energy products manufactured by Tesla, Inc., an American company leading in electric vehicle production.

Marginal Revenue Product

The extra income produced by using an additional unit of a production resource.