Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. What would an economist conclude?
A) In the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.
B) In the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit.
C) The man is behaving irrationally.
D) The man has a positive marginal benefit.

Question

Quizplus · Accepted Answer

An economist would conclude that the man is making a rational decision by choosing to smoke despite the potential health hazards. This is because in the man's judgment, the expected marginal benefit of smoking the cigarette (such as stress relief or pleasure) is higher than the expected marginal cost (such as the risk of developing a smoking-related illness).

Despite the Warning on a Package of Cigarettes About the Potential