"Many towns and cities on the northeast and west coastshave passed bans on smoking in restaurants and bars.What is the economic rationale behind these bans?Should there be similar rationales for banning smoking inautomobiles? Apartment buildings? Houses?"

Answered: "Many towns and cities on the northeast…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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"Many towns and cities on the northeast and west coasts
have passed bans on smoking in restaurants and bars.
What is the economic rationale behind these bans?
Should there be similar rationales for banning smoking in
automobiles? Apartment buildings? Houses?"

Expert Solution

Step 1

A negative externality refers to a cost imposed on a third party by an economic transaction, where the third party does not receive compensation for the cost incurred. These external costs, also known as spillover costs, can arise from various activities, including production and consumption of goods and services.

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