Profit Regulation Flashcards
1
Q
What is profit regulation?
A
when the government takes 100% of a firm’s profits in tax, after they’ve hit a certain profit limit
2
Q
How do firms not get their profits taxed?
A
by reinvesting the profit back into the company
3
Q
Why is profit regulation not very effective?
A
it removes firms’ profit incentive, decreasing efficiency and increasing costs
