How does the law influence pricing decision?


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It helps control supply. When something is highly regulated or illegal, its much harder and more expensive to make. This causes the price to rise. If something isn't regulated and there are no laws about it, then their isn't any additional costs or risks associated with it, so its price will be lower. Take drugs for example. They are only so expensive because they are illegal, and very few people are willing to risk selling them. Then look at something else like sugar for example. Its cheap because there are few restrictions or laws influencing its production or distribution.

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