smoking as an externality.
Externality cost.
Also known as negative externality.
Negative externalities happen when the social cost is higher than the private cost.
Cigarettes- a demerit good.
Even with all the negative health impacts it has on the smoker, his private benefit provides him or her with an image of independence, and even maturity to most smokers would want to have as they are insecure with their immaturity.
Cigarettes are a demerit good as they have a negative externality against the society. When somebody buys a pack of heavily taxed cigarettes, the person smokes and pollutes the air, hence costing the society more than the individual. It also can lead to other things like lung cancer of the passive smokers around him, costing them to pay the price even though cigarettes are already very heavily taxed in our society.
Labels: externality
We Loved1:30 PM
April 2008