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.
Answer: C
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A) collective bargaining B) bilateral bargaining C) sniping D) arbitration
If a monopolistically competitive firm breaks even, the firm
A) is earning zero accounting and zero economic profit. B) should expand production. C) is earning an accounting profit and will have to pay taxes on that profit. D) should advertise its product to stimulate demand.
Which of the following statements is (are) correct? Keynesians criticize the new classical theory because
a. the new classical model cannot explain changes in expectations. b. of the contracting market characterization of the labor market. c. the rational expectations assumption ascribes an extreme and unrealistic availability of information to market participants. d. All of the above
Technology
A) is constantly changing at every point along a production possibilities curve. B) is the recipe for combining land, labor, physical capital, and entrepreneurship to produce a good. C) does not have an effect on the amount of a good a society can produce with its given resources. D) only changes if resources change.