The government of a small town has decided to ban smoking in all restaurants, stores, and government offices. This is an example of the principle that:
A)one person's spending is another person's income.
B)when markets fail to achieve efficiency, government intervention can improve society's welfare.
C)there are gains from trade.
D)resources should be used as efficiently as possible to achieve society's goals.

Question

Quizplus · Accepted Answer

The government's decision to ban smoking in restaurants, stores, and government offices is an example of government intervention to improve society's welfare when markets fail to achieve efficiency. The negative externalities of secondhand smoke justify government intervention to protect public health.

The Government of a Small Town Has Decided to Ban