Government regulation is designed to change both the structure of an industry and the behavior of firms in the industry.
Answer the following statement true (T) or false (F)
False
Instead of worrying about industry structure, regulation focuses almost exclusively on behavior. In general, regulation seeks to change market outcomes directly by imposing specific limitations on price, output, or investment decisions.
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Assume there is a simultaneous increase in home foreclosures and a decrease in consumer incomes. Based on this information we can conclude, with certainty, that in the market for used single-family homes equilibrium:
A) price will increase. B) price will decrease. C) quantity will increase. D) quantity will decrease.
According to the Coase approach, to achieve socially optimal outcome, two sides must bargain. The bargaining might not be successful because
A) transaction costs are ignorable. B) firms engage in strategic bargaining. C) both sides have perfect information. D) None of the above.
One "design principle" that makes informal, community-based solutions to public goods and common resource problems more effective is:
A. the ability of users to monitor one another. B. the participation of resource users in setting the rules for use. C. clear distinctions between who is and is not allowed to access the resource. D. All of these are important to the effectiveness of community-based solutions.
Exhibit 15-7 Foreign exchange market for U.S. dollars and British pounds
Which of the following could cause the dollar-pound exchange rates to change as shown in Exhibit 15-7?
A. American goods become more popular in Great Britain. B. British incomes rise, while U.S. incomes remain unchanged. C. The U.S. price level rises, while the British price level remains unchanged. D. The U.S. real interest rate rises, while the British real interest rate remains unchanged.