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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To appreciate the U.S. dollar against the Mexican peso, in the foreign exchange market the Fed could ________ dollars and ________ pesos
A) buy; buy B) sell; sell C) sell; buy D) buy; sell E) None of the above answers is correct because the Fed cannot affect the U.S. exchange rate.
An oligopoly is a market: a. dominated by a few buyers. b. dominated by one buyer
c. dominated by a few sellers. d. with many sellers.
The total consumer surplus enjoyed by all consumers in a market
a. exceeds the market price b. is measured by the area under the market demand curve c. is measured by the area beneath the market price d. is a Pareto improvement e. is called market consumer surplus
If you have a comparative advantage in a particular task, then:
A. you give up less to accomplish that task than do others. B. you have specialized in that task, while others have not. C. you complete it faster than other people. D. you give up more to accomplish that task than do others.