Because of the problem of second-hand smoke, if unregulated, the market for cigarettes would produce a quantity that is too ____ at a price that is too ____ when compared to the socially optimal results.
A)low; low
B)high; low
C)low; high
D)high; high

Question

Because of the problem of second-hand smoke, if unregulated, the market for cigarettes would produce a quantity that is too ____ at a price that is too ____ when compared to the socially optimal results.
A)​low; low
B)​high; low
C)​low; high
D)​high; high

Quizplus · Accepted Answer

The market for cigarettes, if unregulated, would produce a quantity that is too high at a price that is too low compared to the socially optimal results, because it does not account for the negative externalities (like health issues from second-hand smoke) that affect people other than the smokers themselves.

Because of the Problem of Second-Hand Smoke, If Unregulated, the Market