Q2. In general, regulators of a specific industry are held accountable by three separate interested parties, which least likely includes which of the following groups?

A)   legislators.

B)   customers of the industry.

C)   lobbyists and special interest groups.

Q3. The theory that assumes that despite the original purpose behind its establishment, a regulatory agency will be influenced or even possibly controlled by members of the industry that is being regulated is called the:

A)   share-the-gains, share-the-pains theory.

B)   feedback effect.

C)   capture hypothesis.

Q4. California Electric’s proposed plan to maintain the current program of passing on gradual price increases to consumers can best be described as:

A)   rate-of-return regulation.

B)   natural monopoly regulation.

C)   cost-of-service regulation.

Q5. If consumers change their electricity consumption in response to the California Utilities Commission’s proposal to increase the rates providers are permitted to charge, it can best be described as a:

A)   creative response.

B)   positive effect of deregulation.

C)   feedback effect.

Q6. According to the theory of contestable markets, Andrews’ proposal of deregulation of the industry should produce which of the following outcomes?

A)   An increase in market efficiency due to lower barriers to entry and exit.

B)   A short-term increase in the level of quality of service because of increased competition.

C)   Unemployment rates will fall as new job openings are created in the industry.

答案和详解如下：

Q2. In general, regulators of a specific industry are held accountable by three separate interested parties, which least likely includes which of the following groups?

A)   legislators.

B)   customers of the industry.

C)   lobbyists and special interest groups.

Correct answer is C)

Lobby groups may be funded by various consumer groups or industry participants in order to protect their special interests, but regulators do not answer directly to them.

Q3. The theory that assumes that despite the original purpose behind its establishment, a regulatory agency will be influenced or even possibly controlled by members of the industry that is being regulated is called the:

A)   share-the-gains, share-the-pains theory.

B)   feedback effect.

C)   capture hypothesis.

Correct answer is C)

The capture hypothesis assumes that since industry participants have the most expertise regarding their particular industry, they will fill regulatory positions but still have contact or relationships with members of the industry. Regulators will be “captured” by the very industry they were assigned to regulate and be unable to render impartial decisions.

The capture hypothesis assumes that since industry participants have the most expertise regarding their particular industry, they will fill regulatory positions but still have contact or relationships with members of the industry. Regulators will be “captured” by the very industry they were assigned to regulate and be unable to render impartial decisions.

Q4. California Electric’s proposed plan to maintain the current program of passing on gradual price increases to consumers can best be described as:

A)   rate-of-return regulation.

B)   natural monopoly regulation.

C)   cost-of-service regulation.

Correct answer is A)

CE’s plan is designed to protect its current level of profitability. A rate-of-return regulation approach sets industry-wide prices based upon the cost to produce the good or service plus a reasonable rate of the return to the producer/provider.

Q5. If consumers change their electricity consumption in response to the California Utilities Commission’s proposal to increase the rates providers are permitted to charge, it can best be described as a:

A)   creative response.

B)   positive effect of deregulation.

C)   feedback effect.

Correct answer is C)

A feedback effect occurs when consumers’ behavior is changed as a result of regulation.

Q6. According to the theory of contestable markets, Andrews’ proposal of deregulation of the industry should produce which of the following outcomes?

A)   An increase in market efficiency due to lower barriers to entry and exit.

B)   A short-term increase in the level of quality of service because of increased competition.

C)   Unemployment rates will fall as new job openings are created in the industry.

Correct answer is A)

A contestable market will operate very efficiently because any excess profits in the industry will attract new entrants, which in turn will increase competition and drive prices back to marginal cost.

Thanks a lot!