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:

a. the benefits of government intervention
b. the costs of government intervention
c. social costs of market failure
d. social costs of government failure

Answer 1

d. social costs of government failure

Step-by-step explanation:

Social costs are those costs associated with production of a goods or services which are not accounted for by the free market . These costs are not compensated by the market . Pollution produced by the car in the atmosphere is a social costs which is not accounted for in the cost of manufacturing car . cost of displacing human population for building a dam is a social cost of building dam . They are not compensated by the market.

In the given case , all the costs given are associated with government failure which leads to lead contamination . These costs are not accounted for in the production cost of the goods . So they are social cost.