A chemical bathroom cleaner has an ingredient X that allows the cleaner to lather well and remove stains. The cost of producing a bottle of this bathroom cleaner is $3.60, but the bottle retails for $5.50. When consumers use the bathroom cleaner, the lather that gets washed down the drain escapes into the environment and releases allergens that cause respiratory problems for people. What is the social cost of a bottle of this cleaner?
A) $5.50 less the external cost of such a bottle of bathroom cleaner
B) the cost paid by other people as a result of the use of such a bottle of bathroom cleaner
C) $5.50 plus the external cost of such a bottle of bathroom cleaner
D) $3.60

Question

Quizplus · Accepted Answer

The social cost of the chemical bathroom cleaner includes the cost incurred by society due to the negative externalities caused by its use, such as the release of allergens into the environment. Therefore, the social cost of a bottle of this cleaner is $5.50 (the retail price) plus the external cost of such a bottle of bathroom cleaner. Option A is incorrect as it only subtracts the external cost instead of adding it. Option B is incorrect as it is too vague and doesn't explain how the cost is paid by other people. Option D is incorrect as it only gives the production cost and doesn't consider externalities.

A Chemical Bathroom Cleaner Has an Ingredient X That Allows