A local cafe that allowed patrons to smoke was recently forced to close its doors because it did not comply with local clean air standards.This decision provides an example of:
A)direct regulation of an externality
B)Pigovian taxes
C)a Coase theorem solution to an externality
D)unjustified discrimination against smokers

Question

Quizplus · Accepted Answer

The closure of the cafe due to non-compliance with clean air standards represents direct regulation by the local authorities to address the negative externality of second-hand smoke.

A Local Cafe That Allowed Patrons to Smoke Was Recently