ECP 5705 ECP5705 Week 5 Individual Work 1 (Everest University)

ECP 5705 ECP5705 Week 5 Individual Work 1 (Everest University)

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ECP 5705 Week 5 Individual Work 1 (Everest University)

Government actions affect firms in many ways. Taxes alter incentives and reduce the bottom line. Compliance and paperwork increase selling, general, and administrative costs, while requirements on capital and employment affect how a company allocates its resources. In the following assignment, you will write about how government intervention may have played a role in the stock market.

For this assignment, refer to the concepts from Chapter 10.

In Managerial Economics, read the case “The Regulatory Origins of the Flash Crash” starting on page 377. Answer Questions 1-4 on page 378.

1.  Could it be possible that a government regulation led to the flash crash? Explain.

2.  What does it mean “it’s like a balloon”? What is like a balloon? Why is it like a balloon?

3.  Explain why government regulations to restrict some activity occurring in a free market typically end up making matters worse.

4.  Who supported the Dodd–Frank bill? Who opposed it?


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