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Running head: MICROECONOMICS CASE STUDY
Case Study 3: Smoking at Ike’s Bar-B-Q Pit
Student’s Name
Institutional Affiliation
1
MICRO-ECONOMICS CASE STUDY
2
CASE STUDY 3: SMOKING AT IKE’S BAR-B-Q PIT
Question 1
The graph below shows the externality resulting from cigarette smoking
in Ike's Bar-B-Q P, the diagram shows that an increase in the (tobacco) quantity of cigarettes
consumed increases loss of social welfare and hence causing a negative externality.
b.
Question 2
This externality results from a deviation from the market efficiency because the
externality ...