An Example of the Opportunity Costs Involved with Social Regulation

question 44

Multiple Choice

An example of the opportunity costs involved with social regulation would be:

• A)the monetary costs of hiring administrative assistants to fill out OSHA safety reports.
• B)the environmental costs of pollution control required under the Clean Air Act.
• C)the monetary costs of laboratory trials required to try out a new drug.
• D)the lives that are lost because new drugs are not introduced quickly enough.
• E)the monetary cost of manufacturing a life saving drug.

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Definitions:

Payoff

The return or outcome received from an investment or decision, often used in context of financial transactions and game theory.

Risky Undertaking

An action or project that involves a high degree of uncertainty or danger regarding its outcome or success.

Expected Value

A calculation in probability and statistics that shows what to predict as the outcome on average over many trials.

Investment

The allocation of resources, typically money, with the expectation of generating an income or profit.