Reading 15- LOS c ～ Q1－3 black, particular, class, social

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1.A firm that disagrees with a particular regulation and attempts to avoid it by complying with the specifics of the law but not the intent of the law is demonstrating:
A)    social regulation.
B)    deregulation.
C)    creative response.
D)    the capture hypothesis.

2.Consumers sometimes alter their behavior in response to the implementation of a new regulation. This unintended consequence of regulation is:
A)    a creative response.
B)    consumer psychology.
C)    a cost of regulation.
D)    a feedback effect.

3.Three years ago, regulators enacted a new law that was designed to reduce cigarette smoking by banning it in public workspaces. A recent consumer survey has indicated that although smoking is banned in the workplace, people are smoking even more than before, but in their homes and cars. Consumer reaction to the regulation can best be described as:
A)    creative response.
B)    a feedback effect.
C)    the capture hypothesis.
D)    market inefficiency.

spaceedu

1.A firm that disagrees with a particular regulation and attempts to avoid it by complying with the specifics of the law but not the intent of the law is demonstrating:
A)    social regulation.
B)    deregulation.
C)    creative response.
D)    the capture hypothesis.
The correct answer was C)
Creative response describes the actions of a firm that for whatever reason, economic or philosophical, is trying to avoid full compliance with a regulation without any obvious violations of the law. Though technically in compliance, the firm is violating the spirit of the regulation.

2.Consumers sometimes alter their behavior in response to the implementation of a new regulation. This unintended consequence of regulation is:
A)    a creative response.
B)    consumer psychology.
C)    a cost of regulation.
D)    a feedback effect.
The correct answer was D)
Consumers often react to regulations in ways that were unintended and unforeseen by regulators. These reactions may be positive or negative, but need to be considered when evaluating the full impact of a regulation.

3.Three years ago, regulators enacted a new law that was designed to reduce cigarette smoking by banning it in public workspaces. A recent consumer survey has indicated that although smoking is banned in the workplace, people are smoking even more than before, but in their homes and cars. Consumer reaction to the regulation can best be described as:
A)    creative response.
B)    a feedback effect.
C)    the capture hypothesis.
D)    market inefficiency.
The correct answer was B)
The regulation intended to reduce smoking led consumers to modify their behavior and smoke more in other “legal” places. This is an example of a feedback effect.