Economic Analysis of Social Issues 1st Edition by Alan Grant

Exercise 9

A ladder manufacturer can make a ladder more stable by adding wider feet to the product. Adding wider feet costs $6 per ladder. The manufacturer estimates that this will prevent 4 injury-causing falls for every 1,000 ladders sold and that, on average, each injury causes $1,800 of harm. The manufacturer _________.
A) Should add the wider feet because they are cost-justified
B) Should add the wider feet even though they are not cost-justified
C) Should not add the wider feet because they are not cost-justified
D) Should not add the wider feet because doing so will harm its profits