Which situation is the best example of regulation in an economic system?

• A. Consumers choose to buy more organic products.
• B. A government sets maximum levels of pollution that factories can emit.
• C. Workers negotiate higher wages with their employer.
• D. A company decides to lower its prices to attract more customers.

Answer: (B)

Verified step by step guidance

1. Understand the concept of regulation in an economic system: Regulation refers to rules or laws imposed by a government or authority to control or influence economic activities, often to correct market failures or protect public interests.
2. Analyze each option to identify which one involves government intervention or imposed rules rather than voluntary market actions.
3. Option 1 (Consumers choose to buy more organic products) is an example of consumer preference and market demand, not regulation.
4. Option 2 (A government sets maximum levels of pollution that factories can emit) clearly involves government-imposed limits, which is a direct example of regulation.
5. Options 3 and 4 involve voluntary actions by workers and companies, respectively, and do not represent government regulation.