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?
An incentive refers to the punishment or reward that will affect how a person act towards a particular situation. Logically people decide their actions based on what the benefits will be.
Incentives determines the function of the market world for instance when a price of a particular brand of bread decide to raise their price people may decide to buy other brand of bread more than they buy the expensive brand of bread.
The incentive of being in a smoke free restaurant is causing people to drive all the way for just that benefit.
