Chapter 8- Government regulation of business

Question 1

Negative Externality

Answer 1

When costs/benefits of a transaction are not internalized by the parties, costs or benefits fall elsewhere.
Example: Pollution

Question 2

Positive Externality

Answer 2

Parties of a transaction don’t receive full benefit because of spill over onto third parties that aren’t direct recipients

Question 3

Public Good

Answer 3

National defense, insect eradiation, street lighting or pollution control

Question 4

Commerce Clause

Answer 4

Federal government regulating business activity

Question 5

Correction of Market Failure

Answer 5

Motivation includes:
Constitution
Industry
Bureaucrats

Question 6

Interstate / Intrastate

Answer 6

Interstate- Federal authority over commerce among several states
Intrastate- Activities within one state

Question 7

10th Amendment

Answer 7

Reveres state powers that are nether specifically delegated to the federal government or prohibited to the states

Question 8

Is state regulation unconstitutional?

Answer 8

1- Discriminates against interstate commerce
2- Unduly Burdens interstate commerce

Question 9

Agency

Answer 9

Any government unit other than the legislate and courts

Question 10

Agency Duties

Answer 10

Control Supply, Rates, Conduct
(Information, Standards, Banishment)

Question 11

Administrative Procedure Act (ACA)

Answer 11

Framework for agency rulemaking and details broad standards for the judicial review of agency decisions

Question 12

Procedural / Interpretive Rules

Answer 12

1- Delineate the agency’s internal operating structure and methods
2-Agencies view of the law for which the agency has an administrative policy

Question 13

Independent Agencies

Answer 13

Social Security Administration
The Nuclear Regulatory Commission
The Federal Reserve Board of Governors