The total cost of government regulations in the U.S. manufacturing sector was estimated by the National Association of Manufacturers to be about $2 trillion in 2012, or $15,400 per family. a. Do their findings mean that the United States had too many regulations? Yes. Very few families would be willing to pay $15,400 of their own money to keep the regulations that are in place. Yes. These direct regulations could be replaced by more efficient market incentive plans. No. Even if one life is saved, $15,400 is a small price to pay for increased safety. No. The "right" number of regulations is a normative issue; one could argue that the price society would pay for the ill effects of non-regulation would be greater than $2 trillion. b. How would an economist decide which regulations to keep and which to do away with? Each regulation must be examined in terms of marginal cost and marginal benefit to see whether it is worthwhile. An economist would eliminate almost all of the regulations in favor of more market incentive plans because the market is always more efficient than government. Each regulation must be examined in terms of whether it creates negative externalities or positive externalities to see whether it is worthwhile. An economist would only keep those regulations that increase competition among firms. Any regulation that decreases competition leads to costly inefficiencies.
The total cost of government regulations in the U.S. manufacturing sector was estimated by the National Association of Manufacturers to be about $2 trillion in 2012, or $15,400 per family. a. Do their findings mean that the United States had too many regulations? Yes. Very few families would be willing to pay $15,400 of their own money to keep the regulations that are in place. Yes. These direct regulations could be replaced by more efficient market incentive plans. No. Even if one life is saved, $15,400 is a small price to pay for increased safety. No. The "right" number of regulations is a normative issue; one could argue that the price society would pay for the ill effects of non-regulation would be greater than $2 trillion. b. How would an economist decide which regulations to keep and which to do away with? Each regulation must be examined in terms of marginal cost and marginal benefit to see whether it is worthwhile. An economist would eliminate almost all of the regulations in favor of more market incentive plans because the market is always more efficient than government. Each regulation must be examined in terms of whether it creates negative externalities or positive externalities to see whether it is worthwhile. An economist would only keep those regulations that increase competition among firms. Any regulation that decreases competition leads to costly inefficiencies.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The total cost of government regulations in the U.S. manufacturing sector was estimated by the National Association of
Manufacturers to be about $2 trillion in 2012, or $15,400 per family.
a. Do their findings mean that the United States had too many regulations?
Yes. Very few families would be willing to pay $15,400 of their own money to keep the regulations that are in place.
Yes. These direct regulations could be replaced by more efficient market incentive plans.
No. Even if one life is saved, $15,400 is a small price to pay for increased safety.
No. The "right" number of regulations is a normative issue; one could argue that the price society would pay for the ill
effects of non-regulation would be greater than $2 trillion.
b. How would an economist decide which regulations to keep and which to do away with?
Each regulation must be examined in terms of marginal cost and marginal benefit to see whether it is worthwhile.
An economist would eliminate almost all of the regulations in favor of more market incentive plans because the
market is always more efficient than government.
Each regulation must be examined in terms of whether it creates negative externalities or positive externalities to see
whether it is worthwhile.
An economist would only keep those regulations that increase competition among firms. Any regulation that
decreases competition leads to costly inefficiencies.
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