Lecture 11: Regulations

Question 1

Regulations

Answer 1

Efforts by government to affect market outcomes.

Government intervention in a market that seeks to bring about a different outcome than the equilibrium quantity and price (Q,P).

Question 2

Market for Regulation

Answer 2

The Supply of Regulations: Politicians and Bureaucrats

The Demand of Regulations: Special Interest Groups, Domestic Producers, Voters, Etc.

Question 3

Rent Seeking

Answer 3

Certain groups engage in political lobbying to request regulations to confer benefits to themselves.

Rent-Seeking is spending wealth on political lobbying to increase one’s share of existing wealth without creating wealth. The effects of rent-seeking are reduced economic efficiency through poor allocation of resources and reduced wealth creation.

Question 4

“Bootleggers”

Answer 4

The “Rent-Seekers” who seek to gain financially from regulatory development and enforcement.

Question 5

“Baptists”

Answer 5

The public-minded individuals who promote what they believe is best for society.