"Under the social interest theory of regulation, regulators attempt to maximize profits for the owners of the firms being regulated." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
The statement is incorrect. The social interest theory is the theory that regulators seek an efficient use of resources. The capture theory of regulation is the theory that regulators attempt to maximize the producers' economic profit.
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A multi-plant firm has three plants. At its current production levels, the marginal cost of production is $1.50 at plant 1, $1.50 at plant 2, and $1.50 at plant 3. The firm's overall marginal cost of production is ________.
A) $7.50 B) $1.50 C) $4.50 D) $3.00
In cases of natural monopolies, society would be better off with many firms competing with each other.
Answer the following statement true (T) or false (F)
Assume that the MPC is 0.80 and investment rises by $50 million. How much additional saving will this generate in the second round of spending?
a. $10 million b. $40 million c. $50 million d. $62.5 million e. $250 million
Which of the following individuals is responsible for developing the life cycle theory of consumption?
A) Friedman B) Modigliani C) Keynes D) Lucas