Question

What are the three problems that economists have noted with regard to command-and-control regulation?

a. High administrative costs, inflexibility, and lack of innovation

b. Low administrative costs, adaptability, and high innovation

c. High administrative costs, adaptability, and lack of innovation

d. Low administrative costs, inflexibility, and high innovation

Answer 1

The three primary problems with command-and-control regulation identified by economists are high administrative costs, inflexibility regarding standards and technology requirements, and a lack of incentive for innovation among firms.

Step-by-step explanation:

Economists have noted several problems with command-and-control regulation, a type of economic intervention by the government. The three main issues are:

1. High administrative costs: Implementing and enforcing the regulations involves significant government expenditure, making this approach costly to manage.
2. Inflexibility: Command-and-control regulation tends to be rigid, setting the same standards and often requiring the same technology for all firms, regardless of their individual situations and capacities to reduce pollution or comply with regulations.
3. Lack of innovation: Firms have no incentive to exceed the set standards or improve their methods for reducing pollution since the regulations typically only stipulate that they meet a fixed requirement, disincentivizing further innovation or greater reductions.

Therefore, the correct answer to the student's question is: a. High administrative costs, inflexibility, and lack of innovation.