Regulatory Capture Is Said to Have Occurred When Which of the Following

question 105

Multiple Choice

Regulatory capture is said to have occurred when which of the following is true?

• A) Rules and enforcement in an industry are heavily influenced by the industry being regulated.
• B) One firm controls an entire market, having captured customers away from other firms.
• C) Government imposes excessive regulations in an industry, resulting in inefficiencies.
• D) Consumers make all the rules for an industry, forcing firms into inefficient production methods.

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Definitions:

Fixed Costs

Expenses that do not vary with the level of production or sales over the short term.

Management by Exception

A management strategy where managers only intervene in decision making when performance deviates significantly from standards, allowing more focus on important issues.

Controllable

Refers to costs or elements within a business that can be directly managed, influenced, or altered by decisions of management.

Noncontrollable

Refers to expenses or influences that cannot be altered or changed by the management due to external constraints or fixed contract terms.