Suppose the state of New York passes a law that bans smoking in restaurants. As a result, residents of Manhattan who do not like breathing second-hand smoke begin driving across the border to New Jersey to eat at restaurants there.

Which of the following principles does this best illustrate?

A. Markets are usually a good way to organize economic activity.
B. Trade can make everyone better off.
C. People respond to incentives.
D. Rational people think at the margin.

Question

01-07-2024
Social Studies

Answered

Suppose the state of New York passes a law that bans smoking in restaurants. As a result, residents of Manhattan who do not like breathing second-hand smoke begin driving across the border to New Jersey to eat at restaurants there.

Which of the following principles does this best illustrate?

A. Markets are usually a good way to organize economic activity.
B. Trade can make everyone better off.
C. People respond to incentives.
D. Rational people think at the margin.

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-07-01T15:26:17-04:00

Final answer:

The best principle illustrated is 'People respond to incentives'. It shows how individuals react to policy changes and adjust their behavior accordingly.

Explanation:

People respond to incentives is the principle best illustrated in this scenario. When New York bans smoking in restaurants, residents of Manhattan who dislike second-hand smoke drive to New Jersey for meals to avoid the restriction, showing how people adjust their behavior based on incentives.

This situation exemplifies how individuals seek to maximize their benefits and minimize costs by changing their actions in response to policy changes.

Moreover, it showcases how government interventions in markets can lead to unintended consequences as individuals adapt their behavior to suit their preferences and circumstances.

Learn more about Government interventions and individual behavior here:

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