Suppose That a Regulated Industry Experiences an Increase in the Price

Multiple Choice

Suppose that a regulated industry experiences an increase in the price of inputs used to produce the good. Which of the following statements is TRUE?

A) Under both the capture theory and the share-the-gains, share-the-pain theory profits will decrease.
B) An increase in price will occur quicker in the share-the gains, share-the-pain theory than the capture theory.
C) An increase in price will occur quicker in the capture theory than the share-the-gains, share-the-pain theory.
D) In the capture theory there will be an increase in price but not in the share-the-gains, share-the-pain theory.