Educated and informed consumers are essential for the efficient functioning of the free market system, a goal supported by the government's efforts to ensure that producers provide accurate product information.
Public disclosure laws were put in place to insure that companies were giving the consumers the proper information. The Federal Trade Commission Act requires that companies cannot make their advertisements deceptive (false advertising). Truth in Lending Act requires businesses to offer loans to disclose certain information to consumers
Informed consumers
Educated consumers help to make the free market system work more efficiently. This means that the government wants to educate consumers, and they do this by making sure producers give out information about their products. Products are more likely to be purchased when proper information is given to the consumers.
Negative Effects of Regulation
Budget Cuts
Public pressure for leaner, less costly government resulted in budget cuts which reduced some government regulation of industry.
Over Regulating
Businesses began pointing out that these new rules were costly to implement, cutting into profits, and slowing growth. Highly regulated industries said that government rules and regulations stifled competition and caused unnecessarily high prices.
Governmental Agencies
Demand for government protection of consumers and of the environment created several new government agencies and regulations.
Protecting Public Health, Safety, and Well Being
Government Laws for Consumers
The Federal government and many states are actively involved in passing laws aimed at protecting consumers. They do things like setting manufacturing standards, requiring that drugs be safe and effective, and supervising the conditions in which food is produced.
Zoning Laws
Cities and towns often pass laws designating that certain areas can be used for residential or business purposes only. Zoning laws may forbid homeowners from running certain businesses out of their homes.
EPA
EPA is the Environmental Protection Agency. It is an independent federal agency, created in 1970, that sets and enforces rules and standards that protect the environment and control pollution.
