In eachcase, identify the best description of any divergence between social and private costs or social and private benefits in a free market.

#1: Cigarette smoking

A.

Because most people who smoke cigarettes would be willing to pay more than the price actually charged for a pack ofcigarettes, the social benefits of cigarette smoking are greater than the private benefits.

B.

Because of the potential negative health consequences of inhalingsecond-hand smoke, the social costs of cigarette smoking are less than the private costs.

C.

Because most people who smoke cigarettes would be willing to pay more than the price actually charged for a pack ofcigarettes, the social benefits of cigarette smoking are less than the private benefits.

D.

Because of the potential negative health consequences of inhalingsecond-hand smoke, the social costs of cigarette smoking are greater than the private costs.

E.

There is no divergence between social and private costs or social and private benefits.

#2: Weather forecasting

A.

Because weather forecasting requires investment in expensive equipment that most individuals cannot affordthemselves, the social costs of weather forecasting are greater than the private costs.

B.

Because weather forecasting requires investment in expensive equipment that most individuals cannot affordthemselves, the social costs of weather forecasting are less than the private costs.

C.

Because a weather forecast is information that can be shared with anyone including people who did notproduce, pay for accessto, or watch advertising associated with the forecast-the social benefits of weather forecasting are greater than the private benefits.

D.

Because a weather forecast is information that can be shared with anyone-including people who did notproduce, pay for accessto, or watch advertising associated with the forecast-the social benefits of weather forecasting are less than the private benefits.

E.

There is no divergence between social and private costs or social and private benefits.

#3: Private ownership of guns

A.

To the extent that private gun ownership increases the prevalenceand/or risk of crimesand/or accidents involving guns that affect people who do not ownguns, the social costs of private gun ownership may be greater than the private costs. To the extent that the high private gun ownership rates in an area may deter crime in that entirearea, the social benefits of private gun ownership may be less than the private benefits.

B.

To the extent that private gun ownership increases the prevalenceand/or risk of crimesand/or accidents involving guns that affect people who do not ownguns, the social costs of private gun ownership may be greater than the private costs. To the extent that the high private gun ownership rates in an area may deter crime in that entirearea, the social benefits of private gun ownership may be greater than the private benefits.

C.

To the extent that private gun ownership increases the prevalenceand/or risk of crimesand/or accidents involving guns that affect people who do not ownguns, the social costs of private gun ownership may be less than the private costs. To the extent that the high private gun ownership rates in an area may deter crime in that entirearea, the social benefits of private gun ownership may be less than the private benefits.

D.

To the extent that private gun ownership increases the prevalenceand/or risk of crimesand/or accidents involving guns that affect people who do not ownguns, the social costs of private gun ownership may be less than the private costs. To the extent that the high private gun ownership rates in an area may deter crime in that entirearea, the social benefits of private gun ownership may be greater than the private benefits.

E.

There is no divergence between social and private costs or social and private benefits.

#4: Drilling for offshore oil

A.

Because of the risks of oil spills that could negatively impact local fishing and tourism industries and theenvironment, the social costs of drilling for offshore oil are greater than the private costs.

B.

Because offshore oil drillers risk the possibility of not recouping their costs at a location but consumers risk nothing and enjoy the benefits of increased oil supply when oil isdiscovered, the social benefits of drilling for offshore oil are less than the private benefits.

C.

Because of the risks of oil spills that could negatively impact local fishing and tourism industries and theenvironment, the social costs of drilling for offshore oil are less than the private costs.

D.

Because offshore oil drillers risk the possibility of not recouping their costs at a location but consumers risk nothing and enjoy the benefits of increased oil supply when oil isdiscovered, the social benefits of drilling for offshore oil are greater than the private benefits.

E.

There is no divergence between social and private costs or social and private benefits.

#5: Public health research(assuming results are madepublic)

A.

Because public health research can lead to discoveries and innovations in medicine that help patients and doctors who have no role in funding or conducting theresearch, the social benefits of public health research are greater than the private benefits.

B.

Because public health research involves paying researchers who may not medically benefit from theirwork, the social costs of public health research are less than the private costs.

C.

Because public health research can lead to discoveries and innovations in medicine that help patients and doctors who have no role in funding or conducting theresearch, the social benefits of public health research are less than the private benefits.

D.

Because public health research involves paying researchers who may not medically benefit from theirwork, the social costs of public health research are greater than the private costs.

E.

There is no divergence between social and private costs or social and private benefits.