Explain the capture hypothesis
What will be an ideal response?
The capture hypothesis is a theory of regulatory behavior that predicts that the regulators eventually will be captured by the special interests of the industry being regulated. It is observed that many times regulators come from the regulated industry. Further, the firms have more at stake than consumers and are more likely to organize and lobby for favors than are the consumers. Hence, over time, the regulators will tend to do what the regulated firms want rather than what the consumers want.
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Which of the following is likely to shift the demand curve for workers in rice farms to the right, assuming all else equal?
A) A decrease in the price of rice B) An increase in the price of rice C) An increase in the wage rate D) A decrease in the wage rate
Figure 5-3
Assume the market consists of three consumers with the demand curves in Figure 5-3. At a price of 1, the total market demand is
A. 40. B. 80. C. 140. D. 150.
If a firm has implicit costs as well as explicit costs
A) accounting profit will be zero. B) net income will always be greater than accounting profit. C) net income will always be less than accounting profit. D) economic profit will be less than accounting profit.
Perfectly competitive firms minimize their losses by producing the output level where P = MR = AVC.
Answer the following statement true (T) or false (F)