If a firm shuts down in the short run it will
A) break even. B) suffer a loss equal to its fixed costs.
C) declare bankruptcy. D) suffer a loss equal to its variable costs.
Question 2
What is regulatory capture?
A) It is a situation in which a firm being regulated successfully influences the regulatory agency's actions to benefit the interests of the firm, rather than the public interest.
B) It is a situation in which a regulatory agency uses its authority to force actions that are not favored by the regulated firms but are in the public's interest.
C) It is a situation in which a policymaker seeks to improve his election prospects by aligning himself with a powerful special interest group which will finance his political campaign.
D) It is the exchange of political support between a regulatory agency and the regulated firm resulting in both parties capturing economic rents.
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