Government intervention may achieve a more optimal outcome than the market mechanism when addressing
A)Inefficient bureaucracy.
B)Consumption of cigarettes.
C)The supply of new hot dog stands.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

The consumption of cigarettes creates negative externalities, such as secondhand smoke and healthcare costs. Government intervention, through taxes or regulations, can internalize these costs and achieve a more optimal outcome than the unregulated market mechanism. Inefficient bureaucracy and the supply of new hot dog stands do not necessarily require government intervention.

Government Intervention May Achieve a More Optimal Outcome Than the Market