Some economists who use the public choice model to explain the ways government intervenes in the economy believe that regulatory capture results when an agency or commission is given authority over a particular industry or product
Which of the following is the best example of regulatory capture?
A) A federal government agency hires more employees than it requires to regulate an industry because it does not seek to minimize costs or maximize the agency's profits.
B) The head of an agency is required to testify before Congress because Congress controls the size of the agency's budget. Congress "captures" the agency because of its budget authority.
C) The Food and Drug Administration (FDA) has increased the time and expense pharmaceutical firms incur to receive approval to market a new drug.
D) Firms that were regulated by the Interstate Commerce Commission (ICC) attempted for many years to influence the ICC's actions.
D
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Suppose a competitive firm is paying a wage of $12 an hour. Assume that labor is the only input. If hiring another worker would increase output by four units per hour, then to maximize profits the firm should
A) layoff some workers. B) not change the number of workers it currently hires. C) hire the extra worker. D) There is not enough information to answer the question.
In business organizations, the specialization of workers and their assignments to different tasks is called:
a. division of labor. b. capital efficiency. c. product differentiation. d. labor productivity.