Government intervention may achieve a more optimal outcome than the market mechanism when addressing
A)Inefficient bureaucracy.
B)Consumption of cigarettes.
C)Theme park construction.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

The consumption of cigarettes is a classic example of a market failure due to externalities, such as the negative effects of second-hand smoke on others and the long-term health risks associated with smoking. Government intervention in the form of taxes or regulations can help to internalize these externalities and achieve a more optimal outcome for society as a whole. Inefficient bureaucracy and theme park construction do not necessarily warrant government intervention as they can be addressed through market mechanisms or other means.

Government Intervention May Achieve a More Optimal Outcome Than the Market