Suppose That a Regulated Industry Experiences an Increase in the Price

question 205

Multiple Choice

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. According to the share-the-gains, share-the-pain theory, we would expect

• A) prices to increase by a little immediately and profits to decrease by a lot.
• B) there will be some increase in price but not immediately.
• C) no increase in price.
• D) a quick increase in price maintains profits in the industry.

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Definitions:

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A system developed by the Society of Automotive Engineers (SAE) to classify oils and lubricants based on their viscosity characteristics.

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A welding process using a continuously feeding wire and an inert gas to shield the weld from contaminants.

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