The Public Interest Theory of Industrial Regulation Contends That

question 97

Multiple Choice

The public interest theory of industrial regulation contends that

• A) while industrial regulation is sound in theory, bureaucrats allow monopolists to obtain excessive profits.
• B) regulated monopolies are tantamount to legal cartels.
• C) the objective of regulation is to protect the public from the market power inherent in natural monopolies.
• D) firms in some industries want to be regulated.

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Definitions:

Mutually Cancelling Advertising

Mutually cancelling advertising refers to a situation where the competitive advertising efforts of firms negate each other's impact, leading to no significant change in market share.

Economic Efficiency

A state in which resources are allocated in the most beneficial way, maximizing output while minimizing waste and inefficiency.

Oligopolistic Firms

Companies in a market structure where a small number of firms dominate the industry, often leading to less competition.

Cartel

An association of manufacturers or suppliers designed to maintain high prices and restrict competition.