Suppose That in Most Car Collisions Between Cars of Unequal

question 113

Multiple Choice

Suppose that in most car collisions between cars of unequal size, the smaller car sustains the most damage and its occupants suffer the most injury. In answering the following question, assume that, on average, smaller cars generate less air pollution than larger cars and that every person in the economy drives at least one car. As the average size of cars increases, an individual's incentive to buy a smaller car:

• A)increases in order to prevent injury to others.
• B)increases to offset the external cost of air pollution.
• C)decreases because of the increased risk of injury in a collision.
• D)remains the same because car purchases depend on individual preferences.

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Definitions:

Ordering Costs

Expenses associated with placing and receiving orders for goods or services, including administrative costs and transportation.

Statistical Safety Stock

The level of extra inventory a company holds to protect against uncertainties in demand or supply.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points relative to its mean.

Service Level

A measure of the quality and performance of a service, often reflecting the degree to which customer expectations are met.