A number of cities and states have banned smoking in bars because of secondhand smoke. In cities without the ban, the bar owner decides whether smoking is permitted. If smokers have a greater willingness to pay to smoke than nonsmokers have to avoid smoke, then bar owners will ______ smoking, which is an ______ outcome.
A) ban; efficient
B) ban; inefficient
C) permit; efficient
D) permit; inefficient

Question

Quizplus · Accepted Answer

If smokers have a greater willingness to pay to smoke than nonsmokers have to avoid smoke, then allowing smoking in bars will result in a more efficient outcome. This is because the bar owner can generate additional revenue by catering to the preferences of smokers without causing harm to nonsmokers who can choose to patronize other businesses that do not permit smoking. A ban on smoking in bars would be inefficient in this scenario because it would deny smokers the opportunity to engage in a legal activity and result in a loss of revenue for the bar owner.

A Number of Cities and States Have Banned Smoking in Bars