LS22 - Regulation Flashcards
1
Q
What is a regulation?
A
Rule or law enacted by the government that must be followed by economic agents
2
Q
Why are regulations used?
A
To encourage a change in behaviour toward the socially optimum level of output
3
Q
What are examples of command?
A
Bans
Caps
Limits
Compulsory action
4
Q
What are examples of control?
A
Enforcement
Punishment
5
Q
A
6
Q
What happens if a regulation is correctly implemented?
A
Leads to the removal of welfare loss/gain
7
Q
What are some disadvantages of regulation?
A
Cost of administration & enforcement
Setting correct level is difficult
Unintended consequences
Might encourage black market activity
