1. Factor of Production Government Policy

2. What is Government Policy Any law, tax, subsidy, grant, or regulation that is imposed on a business. Done for the grater good of the population These policies generally require monitoring of by government officials

3. Government Policy Government policy can be run by a department of government – Examples EPA, Department of Agriculture, ect.

4. Government Policy As far as our supply curve goes policy can cause changes – A shift can occur in or out based on a policy For example: – A tax on a firm increases the cost of production. Higher cost means that goods will cost more at every amount to consumers. This will shift the supply curve out.

5. Graphing PricePrice Original Supply Supply with added tax Quantity

6. Government Policy However the inverse is possible! – A government subsidy will give firms capital. This means the cost of production lowers. Now a firm can produce a certain amount of goods for less, meaning lower prices to the consumer. This would sift the supply curve in.

7. PricePrice Original Supply Supply with a government subsidy Quantity

8. Government Policy So it seems that government can hurt the economy through policy, but also it can benefit society. This would lead you to think imposing regulations on firms is a bad thing. – But is that true? – That’s for you to decide!

9. Government Policy Assignment!