Suppose Technical Change Makes It Cheaper for Cable Television Suppliers

question 159

Multiple Choice

Suppose technical change makes it cheaper for cable television suppliers to supply their service. The capture theory would predict that the regulators would

• A) allow the firms to capture the savings and would lower price only if the firms asked them to.
• B) force the firms to pass the savings on to consumers in the form of lower prices.
• C) force the firms to pass the savings on to consumers in the form of better service.
• D) force the firms to pass some of the savings on to consumers and permit them to keep some of the savings for themselves.

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Definitions:

Maturity Matching

The idea that the maturity of financing should match the duration of the project being financed.

Financing

The process of providing funds for business activities, making purchases, or investing.

Term

In finance, refers to the length of time until a financial contract expires. In other contexts, it can mean a specific period or duration.

Secondary Capital Market

The financial market where investors buy and sell securities they already own, as opposed to the primary market where securities are issued for the first time.