The Social Interest Theory of Regulation Asserts That Regulation

question 121

Multiple Choice

The social interest theory of regulation asserts that regulation

• A) seeks an efficient use of resources.
• B) is aimed at keeping prices as low as possible.
• C) helps firms maximize economic profit.
• D) of a natural monopoly must be done using rate of return regulation.
• E) does not work for society as well as would allowing the firms freedom from regulation.

---

Definitions:

Direct Materials

The raw materials directly used in the production of goods.

Direct Labor-Hours

The total time workers spend producing a product or service, directly involved in the manufacturing or production process.

Variable Overhead

Costs that fluctuate with the level of production output, such as utilities for a manufacturing plant, which increase as production increases.

Direct Materials

Raw materials that can be directly associated with the production of specific goods or services and are a major component of total manufacturing costs.