Question : 16.5   Monopoly Regulation 1) ________ natural monopolies a commonly used, potential : 1238807

16.5   Monopoly Regulation

1) ________ natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies.

A) Breaking up firms that are

B) Regulating

C) Outlawing price discrimination by

D) Refusing to grant patents to

E) Giving incentives to firms to become

2) The social interest theory of regulation is defined as the

A) use of regulations to maximize firms’ profits.

B) use of regulations to assure an efficient use of resources.

C) removal of regulations on business activities.

D) implementation and removal of regulations on the cable TV industry.

E) use of rate of return regulation.

3) The social interest theory of regulation is that

A) regulators help producers maximize economic profit.

B) regulation seeks to increase the government’s revenue.

C) regulation causes producers to produce at a point where they are earning normal profits.

D) regulation seeks an efficient use of resources.

E) regulation focuses on the consumers’ interests and ignores producers’ interests.

4) The social interest theory of regulation assumes that

A) regulation is against the public interest.

B) the public is indifferent to regulation.

C) regulation seeks an efficient use of resources.

D) the public cares deeply about regulation.

E) regulators are captured by the firms being regulated.

5) The social interest theory of regulation asserts that regulation

A) seeks an efficient use of resources.

B) is aimed at keeping prices as low as possible.

C) helps firms maximize economic profit.

D) of a natural monopoly must be done using rate of return regulation.

E) does not work for society as well as would allowing the firms freedom from regulation.

6) Who receives benefits if regulation works according to social interest theory?

A) the entire economy

B) cohesive interest groups

C) everyone not in the cohesive interest group

D) the regulators

E) It is impossible to determine who benefits.

7) Under the social interest theory of regulation, the goal of regulating natural monopolies is

A) to provide a larger, though not maximum, profit for the firms.

B) to use average cost pricing.

C) to provide an outcome similar to the competitive outcome.

D) to provide a the maximum profit for the firms.

E) None of the above answers is correct.

8) Capture theory is

A) an economic theory of regulation.

B) a model about perfect competition.

C) the same as the public interest theory.

D) the theory that regulators capture firms’ attention by dictating a very low price.

E) a theory that explains behavior of competitive firms.

9) The theory that regulation helps producers to maximize profit is the

A) social interest theory.

B) consumer surplus theory.

C) antitrust theory.

D) capture theory.

E) oligopoly theory of regulatory bodies.

10) The capture theory of regulation is that regulations

A) help producers to maximize economic profits.

B) mean producers suffer losses.

C) result in diseconomies of scale.

D) benefit society, not producers.

E) benefit the regulators, not the producers or the consumers.