Final answer:
Using the 'service password-encryption' command on a Cisco network device encrypts all plaintext passwords within the configuration file using Type 7 encryption, providing a basic level of security against casual observers.
Step-by-step explanation:
The command service password-encryption is used on Cisco network devices with the intent to provide a basic level of security by encrypting all plaintext passwords in the configuration file. When this command is applied, it will result in option a) It encrypts all passwords in the configuration file. This does not encrypt the passwords to the level of modern encryption standards but applies a simple obfuscation technique (Type 7 encryption) that can prevent casual observers from easily reading the passwords. It is important to note that this type of encryption can be easily decrypted with the proper tools.