Question

Which of the following statements can correctly be made about social regulation? I. Extensive social regulation may have an anticompetitive effect. II. The benefits of social regulation are easier to measure than are the costs of social regulation. g

Answer 1

Answer:

Extensive social regulation may have an anticompetitive effect.

Explanation:

Social regulation refers to a series of public policies, rules, and laws, implemented by a government that try to determine or influence some economic or social activities. Social regulations are often used with specific goals in mind, such as promoting equality, restrict harmful practices, and protect certain sectors of the population, the environment, etc. However, a side effect of regulatiosn is that they might have an anticompetitive effect. That is, they can discourage private activity because the costs of abiding by the regulations might be seem as too high by some actors, thus preferring to stand aside; also, regulations can distort free markets, leading to distortions in prices and misallocation of resources. On the other hand, often times the costs of social regulations are often easier to measure than their benefits. This is because the costs can be directly measured by the amount of money regulations costs to the government and enterprises, while benefits are more often than not indirect, so there are no immediate indicators for how beneficial regulations can be.