Regulation Flashcards

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What is regulation in economics?

Rules or laws set by the government to change behaviour in markets.

To fix market failure and reduce harm, like pollution or unsafe products.

A rule that makes something illegal, like smoking in enclosed public places.

A minimum quality or safety level, for example limits on car emissions.

A rule that you must have a permit to do something, like sell alcohol.

It sets rules, checks behaviour, and fines or shuts firms that break them.

Following rules can raise costs. This can reduce supply and raise prices.

It is clear and quick to act. It can stop very harmful actions.

It can be costly to enforce and may lead to evasion or black markets.

Regulation sets rules you must follow. Taxes and subsidies change costs and prices.