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S E12: When Governments Intervene - Taxes, Price & Quantity Regulations

Think Like An Economist

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Stop Thinking About the Ways the Government Shows Up

Government doesn't suspend market forces, it changes incentives by shaping costs and benefits. When the government tries to influence prices, then quantities will adjust. This means that the government can get the same result in the market with many types of actions. It's actually why you see so much lobbying, because everybody wants the regulation that benefits them the most. And remember, while government might be everywhere, so are market forces.

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