Suppose That a Regulated Industry Experiences an Increase in the Price

question 135

Multiple Choice

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. Which of the following statements is TRUE?

• A) Under both the capture theory and the share-the-gains, share-the-pain theory profits will decrease.
• B) An increase in price will occur quicker in the share-the gains, share-the-pain theory than the capture theory.
• C) An increase in price will occur quicker in the capture theory than the share-the-gains, share-the-pain theory.
• D) In the capture theory there will be an increase in price but not in the share-the-gains, share-the-pain theory.

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Definitions:

Focus Your Attention

The cognitive process of concentrating one's awareness on a particular object, task, or thought, and ignoring other perceivable information.

Semantic Memory

Refers to a part of the long-term memory responsible for storing information about the world, such as meanings of words and concepts.

General Knowledge

Information that has been accumulated over time through various sources about a wide range of subjects.

Procedural Memory

A type of long-term memory involved in the learning and retention of motor skills and habits.