by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Price Cap Regulation?Price cap regulation is where the regulator sets a price that the firm can charge over the next few years. A common pattern was to require a price that declined slightly over time. If the firm can find ways of reducing its costs more...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Regulatory Capture?One difficulty with government price regulation is what economists call regulatory capture, in which the firms that are supposedly regulated end up playing a large role in setting the regulations that they will follow. When the airline...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is Imperfect information?Every purchase is based on a belief about the satisfaction that the good or service will provide. In turn, these beliefs are based on the information that the buyer has available. For many products, the information available to the buyer...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How does Imperfect Information Affect Equilibrium Price and Quantity?The presence of imperfect information can discourage both buyers and sellers from participating in the market. Buyers may become reluctant to participate because they cannot determine the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
Is Consumer Behavior Rational in Economics?There is much human behavior that mainstream economists have tended to call “irrational” since it is consistently at odds with economists’ utility maximizing models. The typical response is for economists to brush these...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How Does the Government provide Social Insurance?Federal and state governments run a number of insurance programs. Some of the programs look much like private insurance, in the sense that the members of a group make steady payments into a fund, and those in the group...
