Suppose a Manufacturing Firm That Is About to Be Regulated

question 8

True/False

Suppose a manufacturing firm that is about to be regulated faces the following actual and potential production costs: 1)$500 before regulation;2)$630 in the future without the regulation;and 3)$700 in the future with the regulation.The true cost of the proposed regulation is $200.
$200 represents the before/after costs of the regulation while the true cost is better reflected by the with/without costs of the regulation which in this example would be $70.

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Definitions:

Comparative Advantage

An economic principle that posits countries, individuals, or entities gain and benefit from trading if they specialize in producing goods and services for which they have a lower opportunity cost.

Comparative Advantage

The expertise of an individual, a corporation, or a sovereign state to create a commodity or a service that bears a lower opportunity cost than that of competing entities.

Relative Costs

The cost of one good or service compared to another, often considered in terms of the opportunity cost of choosing one option over another.