Which of the following is a major shortcoming of government regulation of business monopoly?
a. The regulators often estimate production costs incorrectly and thus force firms into loss positions.
b. The regulators often come to represent the interests of the established firms and use their power to limit competition.
c. The regulators usually permit firms to make unusually high accounting profits.
d. The regulators, acting in consumers' interests, often force prices so low that even with efficient production techniques the regulated firms lose money.
B
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Command-and-control regulation tends to: a. increase the costs of production to reflect the social costs
b. increase the deadweight loss caused by negative externalities. c. decrease the cost of production of firms. d. increase subsidies in order to increase the private benefit of consumption.
If the exchange rate between the U.S. dollar and the Euro were 1.50 ($1.50 = one Euro), what would be the price in dollars of a German automobile that cost 40,000 Euros?
a. $10,000 b. $20,000 c. $60,000 d. $200,000