If the Government Decided to Heavily Regulate Small Farmers Who

question 43

Multiple Choice

If the government decided to heavily regulate small farmers who grow organic and free-range food, the supply of that food:

• A) would increase because the regulations would improve the quality of that food.
• B) would decrease because the regulations are like a tax on the food; they make it more expensive to produce.
• C) would have no effect, because none of the shifters of supply are affected.
• D) would increase because of changing expectations.

---

Definitions:

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.

Externalities

Occurs when the consumption or production of a good affects someone who does not directly consume or produce that good, which can be either positive or negative.

Costs

Expenses incurred in the production of goods or in the provision of services, including labor, materials, and overheads.

Benefits

The advantages or positive outcomes gained from actions or decisions, often considered in economic, social, or health contexts.