Suppose That in Most Car Collisions Between Cars of Unequal

question 40

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 and that every person in the economy drives at least one car.
Refer to the information above.Individuals have a private incentive to:

• A)buy smaller cars so that all collisions will be between owners of smaller vehicles.
• B)buy smaller cars because they pollute less.
• C)buy larger cars so that they are safer in the event of a collision.
• D)not change the size of their cars because their original choice reflected an optimal choice.

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Definitions:

Operating Cycle

The period it takes for a business to purchase inventory, sell products, and convert the sales back into cash, essentially measuring the time span from buying raw materials to receiving cash from sales.

Inventory Turnover Rate

A measure of how quickly a company sells and replaces its stock of goods within a given period, indicating the efficiency of its inventory management.

Opportunity Cost

The expense associated with foregoing the next most favorable option when a choice is made.