According to the text, critics point out that the costs incurred by firms due to regulations
A) increase production costs.
B) lower production costs to the shutdown point.
C) reduce taxes too far.
D) none of the above.
Answer: A
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When underproduction occurs,
A) producers gain more surplus at the expense of consumers. B) marginal cost is greater than marginal benefit. C) consumer surplus increases to a harmful amount. D) there is a deadweight loss that is borne by the entire society. E) the deadweight loss harms only consumers.
The federal government incentive to support special-interest groups (steel, auto, drug, environment) at the expense of unorganized, widely dispersed groups (for example, taxpayers or consumers) occurs
(a) only when the benefits that accrue to the special-interest group exceed the costs imposed on others. (b) when nonspecial-interest voters are unconcerned or uninformed about the issue, and campaign funds are readily available from the special-interest group. (c) only if the government action is efficient. (d) only if the government action will reduce the monopoly power of business or labor, and thereby lead to an improvement in the general welfare.