Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. Which of the following statements is TRUE?
A. An increase in price will occur quicker in the capture hypothesis than the share-the-gains, share-the-pain theory.
B. An increase in price will occur quicker in the share-the gains, share-the-pain theory than the capture hypothesis.
C. Under both the capture hypothesis and the share-the-gains, share-the-pain theory profits will decrease.
D. In the capture hypothesis there will be an increase in price but not in the share-the-gains, share-the-pain theory.
Answer: A
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