Whenever a Regulatory System Is Set Up, Individuals or Firms

question 68

Multiple Choice

Whenever a regulatory system is set up, individuals or firms being regulated will figure out ways to get around these regulations. This is referred to as the law of:

• A)diminishing returns.
• B)unintended consequences.
• C)diminishing control.
• D)demand.

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Definitions:

Negotiate Costlessly

The theoretical scenario wherein parties can reach agreements without incurring any transaction or communication costs.

Social Discount Rate

A rate used in cost-benefit analysis to account for the time value of public projects' benefits and costs, reflecting society's preference for immediate benefits over future ones.

Stock Dissipation Rate

The rate at which the amount of a particular stock or resource is reduced through use or consumption.

Greenhouse Gas

Gases that trap heat in the atmosphere, contributing to the greenhouse effect and global warming.