Examples include jury duty, military service, voting in elections. The question of when governments ought to intervene and to what extent is addressed by economists using the tool of cost-benefit analysis. Adding up all the opportunity costs of a given policy, then adding up all the benefits of the policy and seeing if the benefits outweigh the costs. Some costs and benefits are difficult to quantify. The government sets rules that constrain producers and consumers.
Some policies increase the costs of production for the firm.
This may increase prices, it may also deter innovation. Costs of compliance Regulation and supervision generally involve costs in terms of reporting information, proving compliance and so on. Rent-seeking Individuals try to use political influence to get favorable treatment from the government. The nature of the voting process one person, one vote can lead to sub-optimal outcomes driven by what the majority wants. Costs in a democracy are typically born diffusely by taxpayers, whereas institutions of democracy tend to be responsive to the interests of vocal and powerful groups.