The Interstate Commerce Commission (ICC) regulates railroads, barges and trucks. Suppose technical change lowers the costs of railroads
As a result, the ICC permits railroads to lower prices some but also alters the rates of barges and trucks so they get additional business. The ICC would be acting consistently with A) the capture theory of regulation.
B) the public interest theory of regulation.
C) the share-the-gains, share-the-pains theory of regulation.
D) None of the theories presented in the text since economic regulation is specific to a single industry and not to agencies that cover more than one industry. That is the province of social regulation.
C
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If a farmer’s opportunity cost of producing 10,000 bushels of wheat is 5,000 fewer bushels of soybeans, then his or her opportunity cost of producing 5,000 bushels of soybeans must be 10,000 fewer bushels of wheat.
Answer the following statement true (T) or false (F)
The price charged by a monopolistic competitor for each unit of a good is $7. If it produces 5,000 units of the good at a total cost of $25,000, what is his profit?
A) $8,000 B) $10,000 C) $7,000 D) $35,000
If the multiplier is 10 and income increases by $1000, then saving will increase by
A) $90. B) $900. C) $100. D) $1000.
Governments often choose to regulate monopolies, rather than break them up into smaller firms, because monopolies often are
a. entitled to economic profits b. very big and politically powerful c. more efficient producers d. providing useful goods and services that would not otherwise be provided e. heavily subsidized