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:

Phase Angle

The difference in phase between the inputs and outputs of a system, often measured in degrees or radians.

Parallel Circuit

An electrical circuit in which components are connected so that the same voltage is applied to each component, but the total current is divided among the components.

Inductive Reactance

The opposition that an inductor presents to alternating current, due to its inductance, proportional to the frequency of the current.

Confederation Congress

The governing body of the United States under the Articles of Confederation, serving from 1781 to 1789, before the adoption of the Constitution.