After a government introduces a new regulation, it must spend considerable resources to ensure compliance with that regulation. The resources spent toward ensuring the compliance is an example of _____ costs.

Question

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The resources spent by a government to ensure compliance with a new regulation are an example of transaction costs. Transaction costs are expenses incurred during the process of buying or selling a good or service, which in this context includes the costs associated with enforcing or ensuring compliance with regulations.

After a Government Introduces a New Regulation, It Must Spend