Question

The costs of lead contamination have been estimated to be $1 billion for medical care of those sickened by lead, plumbing repairs, and reduced earnings of those affected by lead. This $1 billion can best be classified as:

Answer 1

Answer:

Social cost of market failure

Explanation:

Market failure is an economic situation in which an imperfection in the market mechanism prevents an optimal outcome.

The $1 billion cost of lead contamination intended for the medical care of those sickened by lead, plumbing repairs and reduced earnings of those affected is called social cost of market failure.

Whenever external benefits and costs exist, the market will not produce at the optimal outcome leading to social cost of market failure by an organization.

External costs are costs that are imposed without compensation on a third party.