Question

In: Economics

1The public interest theory of regulation holds that Group of answer choices regulators are seeking to...

1The public interest theory of regulation holds that

Group of answer choices

regulators are seeking to do and will do through regulation what is in the best interest of the public or society at large.

even though regulators seek to do what is in the best interest of the public at large, through regulation they end up doing what is in the best interest of the special interests of the industry that is being regulated.

even though regulators seek to do what is in the best interest of special interests of the industry that is being regulated, through regulation they end up doing what is in the best interest of the public at large.

regulators are seeking to do and will do through regulation what is in the best interest of the special interests of the industry that is being regulated.

2The Herfindahl index measures the

Group of answer choices

degree of concentration in an industry.

size of a market in terms of total dollar sales.

degree to which average variable cost is higher than average fixed cost at every level of output.

the amount of deceptive and false advertising in an industry.

none of the above

Expert Solution

Question 1

Public interest theory of regulation is the theory related to regulations being enacted by the government in order to correct market failure associated with a particular industry.

This theory states that regulations to be enacted by the government should be such that they must promote the welfare of the society as a whole rather than advancing the welfare of certain special interest groups.

Hence, the correct answer is the option (1) [Regulators are seeking to do and will do through regulation what is in the best interest of the public or society at large].

Question 2

Herfindahl Index is an index that measures the market competitiveness and the degree of concentration of market power.

HHI is generally measured in case of merger happening in an industry to see whether such merger will reduce competition or not. A merger reducing competition or increasing concentration is generally not approved by the authorities.

So,

The Herfindahl index measures the degree of concentration in an industry.

Hence, the correct answer is the option (1).

Rahul Sunny answered 6 months ago

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