Why Might Some Businesses Lobby for Increased Regulation by the Federal

question 99

Multiple Choice

Why might some businesses lobby for increased regulation by the federal government?

• A) because they do not know that regulations always hurt them
• B) to gain access to federal bureaucrats who will act in their interests
• C) to lower their overall tax rate
• D) to increase their profit margins to better serve the public good
• E) to protect themselves from domestic and foreign competitors

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Definitions:

Imperfect Competition

Imperfect competition is a market structure where the conditions necessary for perfect competition are not met, leading to price and output decisions that are influenced by individual firms.

Efficient Market Outcomes

Refers to a scenario where market prices fully reflect all available information, leading to an optimal allocation of resources.

Monopolistic Competitive Industries

Industries characterized by many firms offering slightly differentiated products, where each has some degree of market power.

Market Power

The ability of a firm or group of firms to raise and maintain prices above the level that would prevail under competition.