Question

1. Based on the post-employment conflict of interest, over time regulatory agencies can develop a bias to support the

welfare needs of society in general.

groups of individuals who are not likely to be affected by regulation.

desires of the firms that are being regulated.

goals of attaining economic efficiency.

2. According to public choice theory, individual self-interests influence the actions of

consumers in the private sector, but not voters in the public sector.

producers in the private sector, but not politicians in the public sector.

taxpayers, but not the recipients of government produced public goods.

consumers, producers, voters, and politicians in both the private and public sectors

Answer 1

1. The correct option is C- desires of the firms that are being regulated.

Because regulatory agencies depend on the firms that are being regulated for their existence, they by default need them to exist (post-employment conflict of interest) and hence, they get biased ttowards the desires of the firm that is being regulated.

2. The correct option is D- consumers, producers, voters, and politicians in both the private and public sectors

The public choice theory assume that everyone acts in self-interest not only in private domain, but in public domain also. Hence option D.