A question facing many U.S. states is whether to allow casino gambling. States with casino gambling have seen a substantial increase in tax revenue flowing to state government. This revenue can be used to finance schools, repair roads, maintain social programs, or reduce other taxes.

a. Recall that efficiency means producing what people want at the least cost. Can you make an efficiency argument in favor of allowing casinos to operate?

b. What nonmonetary costs might be associated with gambling? Would these costs have an impact on the efficiency argument you presented in part a?

c. Using the concept of equity, argue for or against the legalization of casino gambling.