The administrative costs of regulation include the opportunity costs of the factors of production used by government to administer the regulations.

Question

Quizplus · Accepted Answer

The administrative costs of regulation not only include the direct expenses incurred by government agencies in creating and enforcing regulations, but also the opportunity costs of the resources used by those agencies which could have been used elsewhere in the private sector. This includes factors of production such as labor, capital, and land that could have been used for alternative economic activities.

The Administrative Costs of Regulation Include the Opportunity Costs of the Factors