"Second-hand" smoke is an often cited disadvantage of allowing smoking in restaurants. In economics, "second-hand" smoke is referred to as a(n)
A) capital good.
B) externality.
C) economic cost.
D) negative investment.

Question

Quizplus · Accepted Answer

In economics, "second-hand" smoke is considered an externality, which is a cost or benefit caused by a market activity that affects parties outside of the market. In this case, the cost of second-hand smoke affects non-smoking patrons and employees in restaurants. Capital goods refer to physical assets like machinery and equipment, economic cost is the cost incurred in producing a good or service, and negative investment refers to investing in assets with a negative return.

"Second-Hand" Smoke Is an Often Cited Disadvantage of Allowing Smoking