Some Economists Who Use the Public Choice Model to Explain

question 86

Multiple Choice

Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product.Which of the following is the best example of regulatory capture?

• A)The Food and Drug Administration (FDA)has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug.
• B)A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits.
• C)The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority.
• D)Firms that were regulated by the Interstate Commerce Commission (ICC)attempted for many years to influence the ICC's actions.

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Definitions:

Theory A And Theory B

An approach in management theory, generally contrasting in nature, where Theory A focuses on authoritarian management and Theory B emphasizes participative management.

Cafeteria Plan

A benefit plan offered by employers that allows employees to choose from a variety of pre-tax benefit options, such as health insurance and retirement plans.

Outsourcing

The practice of having certain job functions done outside a company instead of having an in-house department or employee handle them.

Goal Specificity

The clarity and preciseness of a goal, which helps in planning and achieving desired outcomes by making expectations clear and measurable.