When state regulators require consumers to purchase and use a safety device,the regulation

Question

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This is because if the marginal cost of providing the last device purchased is equal to the marginal social benefit of that device, then the regulation will not lead to a reduction in economic surplus. In other words, the benefits of the safety device outweigh the costs of providing it, and therefore the regulation does not lead to economic inefficiencies. However, if the costs of providing the device outweigh the benefits, then the regulation would lead to a reduction in economic surplus. Choice A is incorrect because it assumes that any regulation leads to a reduction in economic surplus, which is not always the case. Choice B is incorrect because infringing on personal liberty is not necessarily the determining factor in whether a regulation reduces economic surplus. Choice D is incorrect because subsidizing the purchase of a safety device may increase economic surplus, but it is not a necessary condition for a regulation to not reduce economic surplus.

When State Regulators Require Consumers to Purchase and Use a Safety