Over Time,state and Local Governments Have Passed Regulations That Limit

question 50

Essay

Over time,state and local governments have passed regulations that limit entry into certain markets.For example,in most locations beauty shops and barber shops must obtain a license to do business.The usual justification for such licensing requirements is to better ensure that only qualified people are offering such services.Considering the efficiency implications of having more or less firms serve a particular market,and the fact that consumers can "vote with their feet" (i.e.,buy from a different if they aren't satisfied),is such regulation justified from an economic perspective? Why or why not?

---

Definitions:

Poverty Line

A specified threshold of income deemed necessary to meet basic living costs, below which individuals or families are considered to be living in poverty.

Income Inequality

The unequal distribution of annual or lifetime income among individuals or households within a society.

Pre-Tax-And Transfer Income

The total income of individuals or households before taxes are deducted and before any government transfers, such as subsidies or welfare, are added.

Trend

A general direction in which something is developing or changing over time.