Which of the Following Would Best Explain Why Regulatory Capture

question 254

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:

Markets for Goods

Platforms or mediums where goods and services are exchanged between buyers and sellers.

Households

Economic units consisting of all the people who occupy a housing unit, often playing a role as consumers in the economy.

Firms

Firms are business entities engaged in commercial, industrial, or professional activities, aiming to make a profit by providing goods or services.

Labor Supply Curve

a graphical representation showing the relationship between the wage rate and the quantity of labor workers are willing to supply.