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
Government regulation is best applied in cases_____. a. where the marginal benefit of the regulation is greater than the cost of the bureaucracy b. where imposed rules can increase efficiency more than govt. production would c. where the marginal benefit of regulation improves the cost efficiency of the producers d. where imposed rules can increase […]
Which of the following is a normative economics statement? a. An increase in the minimum wage will reduce teenage employment. b. Increasing the minimum wage will result in more votes for progressive candidates. c. Raising the minimum wage would greatly increase labor costs in certain industries. d. Raising the minimum wage is a poor idea […]
The government protects rights in a market economy by providing _____. a. production b. allocation c. registration d. courts ANSWER d
The optimal level of rights protection is _____. a. zero b. the marginal cost of additional protection equals the market price of the good c. the marginal cost of additional protection equals the marginal benefit of the good d. absolute ANSWER c
Outcomes are likely to be Pareto superior if they were _____. a. approved of by a unanimous vote b. enacted by a bureaucrat c. decreed by a judge d. enacted by bipartisan legislation ANSWER a
Which of the following would not satisfy the potential compensation criterion? a. The winners from a policy change could compensate the losers so everyone would be better off. b. The policy change was approved by a unanimous vote. c. The policy change was a Pareto superior move d. The policy change moved from a Pareto […]
Government regulation can improve economic efficiency if _____. a. regulators encourage uncompetitive markets to act competitively b. regulators have private information firms do not have c. regulators are able to coordinate inter-industry actions to achieve efficiencies d. regulators base their actions on the revealed preferences of market participants ANSWER a
