question archive Second-hand" smoke, an often cited disadvantage of allowing smoking in restaurants, is referred to in economics as a(n): a
Second-hand" smoke, an often cited disadvantage of allowing smoking in restaurants, is referred to in economics as a(n): a
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Second-hand" smoke, an often cited disadvantage of allowing smoking in restaurants, is referred to in economics as a(n):
a. capital goods
b. externality.
c. economic cost.
d. negative investment.
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The answer is b.
Smoking lowers the air quality for other people in the restaurant, who in addition is not compensated for suffering from lower air quality. Hence second-hand smoking is an externality.
