The arguments for and against the regulation of markets
Regulation means governments set rules that firms must follow. It can fix market failures, but it can also create new problems and costs.
Real World
Ofgem's energy price cap, introduced in 2019, directly limits what suppliers like British Gas can charge households, preventing exploitation of consumers in a market with limited switching.
Exam Focus
When asked to 'assess' regulation, link each argument to a specific type of market failure — this shows the examiner you understand the underlying economic rationale.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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