Which of the Following Would Best Explain Why Regulatory Capture

question 63

Multiple Choice

Which of the following would best explain why regulatory capture is a problem?

• A) The regulations implemented tend to reduce the profitability of the regulated industry and reduce global competitiveness.
• B) Regulatory capture unduly increases the size and power of government, increasing costs for taxpayers.
• C) Individuals implementing the regulations lack expertise about the industry and therefore make poor regulatory choices.
• D) The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price over a specified period.

Short-Run Supply

The supply of goods or services that can be adjusted in a relatively short period to meet changes in demand.

Long-Run Supply

The total quantity of goods or services that producers are willing and able to supply over a long period, considering all inputs and production costs are variable.

Production

The process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (the output).