00:01
Hey everyone, today we're solving problem number 22 from chapter 11 of the textbook, which asks us to essentially define cost plus regulation.
00:13
Now, in the summary of this chapter, towards the end of the textbook, they give us this definition.
00:19
Cost plus regulation refers to government regulating a firm, which sets the price that a firm can charge over a period of time, by looking at the firm's accounting costs and then adding a normal rate.
00:31
Of profit.
00:33
So just to give a more generalized definition, cost plus regulation is when regulators in general, obviously that mainly comes from government regulation.
01:00
On a general scale, it's when regulators permit or allow a regulated firm, which obviously just indicates that that firm is overseen and overshadowed by typically the government.
01:33
Obviously, firms make up the market and the economy...