The equilibrium level of regulation is _____. a. determined where marginal political gains to the special interests are equal to the marginal political costs of the foregone regulation b. determined where the marginal benefits from the regulation are equal to the marginal costs of the regulation c. determined where the marginal political benefits to the […]
The transitional gains trap is a _____. a. by-product of some types of regulation b. associated with the move from a socialist to a market society c. associated with the move from a communal to a socialist society d. by-product of changing the rate at which capital gains are taxed ANSWER a
Production and exchange is beneficial as long as the demand curve lies below the supply curve. a. True b. False ANSWER b
If compared against other criteria for evaluating the public interest, the social welfare function is most comparable to _____. a. utilitarianism b. the Pareto criteria c. the potential compensation criterion d. cost-benefit analysis ANSWER a
Positive economic analysis _____. a. evaluates policy changes and determines whether it is a good idea b. seeks to understand the outcome of a policy change c. cannot be proven incorrect d. is a statement about “what ought to be” ANSWER b
The capture theory of regulation states that _____. a. regulators act in the best interests of regulators b. regulators act in the best interests of politicians c. regulators act in the best interests of the general public d. regulators act in the best interests of the regulated ANSWER d
Normative economic analysis _____. a. is concerned only with the facts b. is a statement about the relationship between a policy change an outcome c. judges the desirability of a policy change d. does not involve value judgments ANSWER c
Which of the following statements provides the best description of one reason why regulation of an industry might not increase economic efficiency? a. There are more employees of regulated industries than affected customers. b. Insufficient regulator pay makes it difficult to hire effective regulators. c. The regulated industry has stronger incentives to be involved in […]
Suppose an individual inverse demand curve is given as P = 2 – 1/2 qi, where qi is the quantity demanded by individual i. There are 50 individual consumers with this identical, individual inverse demand curve. Solve for the market demand curve. What will be an ideal response? ANSWER Solve for the individual, regular […]
If regulations create barriers to entry in an industry, the result can be _____. a. efficiency b. monopoly c. monopsony d. higher output ANSWER b
