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

Question

Quizplus · Accepted Answer

Second-hand smoke is a negative externality, which is a cost imposed on third parties who are not involved in the transaction (i.e. non-smoking customers in a restaurant). Negative externalities are a market failure and can lead to inefficient outcomes, which is why many governments regulate smoking in public spaces.

"Second-Hand" Smoke, an Often Cited Disadvantage of Allowing Smoking in Restaurants