Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:
A)in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit.
B)the man is behaving irrationally.
C)the smoker is unconcerned about his future health.
D)in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Question

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:
A)​in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit.
B)​the man is behaving irrationally.
C)​the smoker is unconcerned about his future health.
D)​in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Quizplus · Accepted Answer

An economist would conclude that the man believes that the expected benefit he will derive from smoking the cigarette outweighs the expected cost. Despite the warning on the package, the man is making a rational choice based on his own judgment of the situation. The assumption that the man is unconcerned about his future health or that he is behaving irrationally cannot necessarily be made based on this single action.

Despite the Warning on a Package of Cigarettes About the Potential