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

Question

Quizplus · Accepted Answer

The scenario exemplifies the principle of people responding to incentives. The ban on smoking in restaurants in Illinois creates an incentive for non-smoking residents of Wisconsin to drive across the border to eat at restaurants there, where they can avoid second-hand smoke.

Suppose the State of Illinois Passes a Law That Bans