Explain how a legal cartel theory of regulation can be similar to a cartel
What will be an ideal response?
A cartel is formed when a group of competing firms make an agreement to cease competing. The firms either control the price of the product or divide the market geographically so each firm becomes a monopoly in their region. The legal cartel theory of regulation works in a similar way. Government regulations can move prices toward monopoly levels. This can encourage businesses to seek regulation if it believes the regulation will produce competition and raise prices.
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A decrease in demand will cause the equilibrium price and quantity of a good to fall, ceteris paribus
Indicate whether the statement is true or false
When a citizens' group opposes expansion of the prison located in town, the basis of the opposition is that the larger prison will produce
a. a negative externality for the community b. a positive externality for the community c. more jobs in the community d. tax revenue for the community e. improved criminal justice options
Economic profit equals
A) NOPAT less capital charges. B) NOPAT plus capital charges. C) NOPAT plus interest payments on bonds. D) NOPAT minus accounting profit.
For society as a whole, producing more of one good or service has an opportunity cost because
a. human wants are limited and resources are unlimited b. both human wants and resources are unlimited c. resources are limited; human wants are irrelevant d. human wants are unlimited and resources are limited e. both human wants and resources are limited