Cost Benefit Principal

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Cost Benefit Principle

The cost benefit principle basically states that when taking an action it should only be done if the extra benefits are at least as great as the extra costs. All effects of this action must be taken into consideration in order to properly analyze this principle in everyday life. A good example where this analysis is very interesting, and has many pros and cons, is cigarettes. The overall economic costs of smoking cigarettes have become very widespread in society for a variety of reasons. An obvious one is that they are so addictive and people get hooked very easily on them. They are very appealing to a lot of people and that is why they have become so popular. When it comes to the costs of cigarettes there are many private and social costs. The cost of cigarettes alone is just the beginning of the private costs. Cigarettes are not healthy so basically people are paying with their health and in a lot of cases their life. Even though the costs are pretty bad there are some benefits. The total cost of smoking not only effects smokers, but society as well. The externalities from smoking are both negative and positive. Society suffers the negative externalities by the smell and health. Second hand smoke is just as bad as smoking itself. Also smoking is kind of frowned upon in society today. Many people just straight up don’t like smokers. The positive externalities play a significant economic role in society. The tobacco industry generates a great deal of revenue; thus adding to the country's GDP. And due to the heavy taxing, cigarettes and tobacco are a rich source of revenue to the Government. Even though it harms people it is their choice to smoke, no one makes them do it. In this case the extra benefits are at least as good as the extra costs, which is why cigarettes are still for sale in the United States. It’s kind of sad saying it, but peoples’ health and well-being is basically less important than the...
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