Which of the following is a supply-side policy action to increase competition?

• A. Tariffs on imports
• B. Increase competition (Deregulate)
• C. Raise taxes on businesses
• D. Increase welfare spending

Answer: (B)

Supply-side actions that boost competition focus on making markets more contestable by removing barriers to entry and improving firms’ operating efficiency. Deregulation reduces regulatory constraints, licensing requirements, and other rules that raise the cost or difficulty of starting or running firms. When barriers are lowered, more firms can enter or compete in a market, pushing prices toward competitive levels and encouraging innovation. Tariffs on imports protect domestic producers and can reduce overall competition and efficiency, so they aren’t a way to increase competition. Raising taxes on businesses or increasing welfare spending doesn’t directly push supply or competition; taxes can dampen investment, and welfare spending targets demand rather than supply. Therefore, removing unnecessary regulations to encourage competition best fits a supply-side policy action to increase competition.