Question

Suppose the state of Florida responds to the demands of nature-lovers and bans billboards along the roads and highways. What effect would such a ban have on the prices of motels, restaurants and other services previously advertised on billboards? Would such a ban increase the amount of time travelers take to find a place to eat or sleep?

Answer 1

As a result of a ban on the billboards advertising motels and hotels, a lot of people who would initially see the ad and go to the motel would now not know about them. Thus, this component of demand for motels will fall and the aggregate demand curve shifts to the left. Thus, the new equilibrium prices will fall.

Yes, the ban on billboards can increase the time taken by travelers to find food and accommodation. As a lot of people used to find information from the billboards, they will now have to turn to alternative sources like asking the locals which might take more time.