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Homework answers / question archive / Suppose the state of Illinois passes a law that bans smoking in restaurants

Suppose the state of Illinois passes a law that bans smoking in restaurants

Economics

Suppose the state of Illinois passes a law that bans smoking in restaurants. As a result, residents of Wisconsin who do not like breathing second-hand smoke begin driving across the border to Illinois to eat at restaurants there. Which of the following principles does this best illustrate?

a) People respond to incentives,

b) Rational people think at the margin,

c) Trade can make everyone better off,

d) Markets are usually a good way to organize economic activity.

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Which of the following principles does this best illustrate? a) People respond to incentives.

The response shows that those who prefer a smoke-free environment are willing to drive further for that environment. Attracting Wisconsin diners may or may not have been part of the motivation in Illinois. So we don't know if this was a primary (intended) effect or a secondary (unintended consequence) effect.

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