Explain the share-the-gains, share-the-pains theory. How does it differ from the capture hypothesis?
What will be an ideal response?
The share-the-gains, share-the-pains theory differs from the capture hypothesis in that it argues consumers are taken into consideration, at least to some extent, by the regulators. If their actions harm consumers too much, regulators know they will complain to legislators, and the regulators may be out of a job. So, they try to balance the interests of the producers and the consumers, and not give all the benefits to one group or make one group bear all the costs. The regulatory agency is not completely captured by the industry, but also takes into account consumers and legislators.
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The law of supply states that:
a. there is a negative relationship between the price of a good and the quantity of it purchased by suppliers. b. there is a positive relationship between the price of a good and the quantity that buyers choose to purchase. c. there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers. d. at a lower price, a greater quantity will be supplied.
Which of the following variables do not change autonomous consumption?
a. Demographics b. Taxation c. Expectation d. Wealth e. Disposable income
If all we know is that the opportunity cost of a car equals 100 refrigerators in France, and 200 refrigerators in Italy, we can conclude
a. nothing about which nation has the absolute advantage in refrigerator production b. that France has a comparative advantage in refrigerator production c. that mutually beneficial international trade might involve the market exchange of 1 car for 80 refrigerators (whereby France would gain more than Italy) d. that mutually beneficial international trade might involve the market exchange of 1 car for 300 refrigerators (whereby Italy would gain more than France) e. that France has the absolute advantage in car production
If a firm finances a new project using its own funds,
a. the cost is minimal b. the opportunity cost of borrowing has been avoided c. investment funds will be in excess supply d. the financing charges are the measure of the real interest rate e. the interest rate represents the firm's opportunity cost