Regulations that arise to ensure that firms take responsibility for the social costs of their products or production processes stem from which reason for government legislation of business ?
Correct answer: C. To protect the interests of society
- A. To protect companies form each other
- B. To protect consumers from unfair business practices
- C. To protect the interests of society
- D. To protect businesses from unfair consumer demands
Explanation
Government requires firms to bear social costs such as pollution because these costs affect society beyond the private costs shown in the firm's accounts. This reflects legislation designed to protect the interests of society.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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