The Capture Theory of Regulation Predicts That

question 268

Multiple Choice

The capture theory of regulation predicts that

• A) regulation helps producers to maximize profits.
• B) regulators capture the firm's economic profit and transfer it to consumers as consumer surplus.
• C) regulators eliminate the deadweight loss a monopoly can create.
• D) resources are used efficiently.
• E) regulators capture the firm's economic profit and transfer it to themselves.

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Definitions:

Endangered Species Act

A U.S. law enacted in 1973 aimed at protecting species threatened with extinction.

Price Elasticity

The measure of how much the quantity demanded or supplied of a good changes in response to a change in its price.

Capacity Constraints

Limitations on the maximum output a system can produce due to physical or resource-based limitations.

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to a stable market situation.