a. A community ponders implementing a no-smoking ordinance that would eliminate smoking in all businesses, government offices, and public places. Smokers are upset and argue that their rights are being violated by this proposed ordinance. An independent analyst estimates that the benefits of the ordinance (reduced medical care costs) will be $100,000 a year while the cost of implementing the ordinance (publicity, enforcement) will be $40,000. Would it be efficient to implement the ordinance? Explain your answer.
b. The Social Security system provides income for people over age 65. If a recipient of Social Security decides to work and earn some income, the amount received in Social Security benefits is typically reduced.
c. How does the provision of Social Security affect people's incentive to save while working?
d. How does the reduction in benefits associated with higher earnings affect people’s incentive to work past age 65?