Although Companies Generally Do Not Wish to Be Regulated by the Government

question 32

Multiple Choice

Although companies generally do not wish to be regulated by the government, some monopolists welcome regulation of the industry. Which statement BEST explains why?

• A) Regulation is rent-seeking activity because once an industry is declared a monopoly, the firm is protected from competition.
• B) Regulation is an x-inefficiency because a monopolist feels the need to waste resources on dealing with government regulators.
• C) Regulation maximizes profits because the government looks favorably on price discrimination.
• D) Regulation helps the firm become more efficient because the government prefers to subsidize monopolies.

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Definitions:

Measure of Stability

A metric used to assess the consistency or reliability of a measurement over time.

Error Score

The difference between an observed value and the true value, often used in the context of measurement and assessment to evaluate accuracy.

True Score

In psychological testing and measurement, the actual or real score that perfectly reflects the characteristic or ability being measured, without measurement error.

Observed Score

The actual score or measurement recorded during data collection.