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Business and Its Environment

Business

Quiz 10 :

Regulation: Law, Economics, and Politics

Quiz 10 :

Regulation: Law, Economics, and Politics

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Regulation takes place through a private process that is relatively closed and low-profile.
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True False
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False

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The Fifth and Fourteenth Amendments provide the authority for regulation.
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True False
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Answer:

False

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Interested parties can participate in both formal and informal rule-making proceedings but are unable to attempt to influence agency actions outside the proceedings.
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True False
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False

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Federal law delegates the implementation of federal regulations such as environmental issues or health issues to the states.
True False
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Independent regulatory commissions are immune from Congressional oversight or interference in their affairs.
True False
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Substantial economic inefficiency is an inherent consequence of a natural monopoly.
True False
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The market imperfection perspective is grounded in political economy theory.
True False
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Regulation is not always intended to correct market imperfections but instead can be the result of political forces that serve objectives other than economic efficiency.
True False
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Asymmetric information results in market efficiency when it is in the self-interest of its possessor not to supply it.
True False
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When there are market imperfections, government intervention could improve its efficiency.
True False
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A natural monopoly occurs if having more than one supplier would result in an uneconomical duplication of facilities.
True False
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Private interests affect regulatory agencies directly through their participation in hearings and other regulatory proceedings and indirectly through pressure on Congress and the executive branch.
True False
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Although regulation is one response to moral hazard problems, but regulation can also cause moral hazard problems.
True False
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A pharmaceutical company does not mention all the side-effects of its new medical formulation. This is an example of moral hazard problem.
True False
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Even when there are advantageous trades that could be made, market imperfections can arise when people have different information at the time they act.
True False
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The executive branch can influence regulatory commissions through the policy expertise of cabinet agencies.
True False
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Private sector is does not supply public goods.
True False
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Government intervention to deal with market imperfections or failure may itself be subject to a nonmarket failure.
True False
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A natural monopoly results when costs are increasing in the scale of output or in the scope of the set of goods a firm produces.
True False
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Natural monopolies provide an efficiency rationale for regulation to align private and social costs.
True False
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