# November 2023 In what way the U S trucking industry exemplified the capture theory hypothesis of government regulation prior to the passage

In what way the U.S trucking industry exemplified the capture theory

In what way the U.S trucking industry exemplified the capture theory hypothesis of government regulation prior to the passage of the Motor Carrier Act of 1980 and (b) the result of the passage of the Motor Carrier Act in 1980

QCT 6

— 6.7 points each for a total of 80 points

Salvatore’s chapter 12:

1. Discussion Questions: 7, 11, and 13.
2. Problems: 12 and spreadsheet problem 1 (p. 523).

Froeb and McCann’s chapter 14:

1. Individual problems: 14–1

News papers vending machines allow buyers to take more than one paper due to the fact that pricing is based on bundle pricing, when the bundled price is set at say \$5, the consumer purchases the entire bundle.  This is analogous to the logger who harvests all the trees under a fixed payment. Instead of charging by the tree , and letting the logger choose how many trees to consume , the tract owner makes more money by bundling all the trees together and selling them for a lump sum

Whereas the soft drink vending machine is based on direct price discrimination and dispenses one can at a time.

1.  14–2.

The pricing of the movie ticket is based on the principles of marginal analysis. That is if marginal revenue (MR) is greater than (MC) you can increase profit by selling another unit.  Thus reduce price (sell more) if MR ˃ MC. Increase price (sell less) if MR˂ MC. From the table on the excel document, shows that the low-value customers who are 65 years and older, ticket will sell at the price of \$5 the theatre can sell to only one unit of the customers, however, at this price the theater can make a profit of \$1.50 and the marginal revenue is \$5 greater than the marginal cost of \$3.50 which is the royal payment to the film distributor for each ticket sold. According to marginal analysis the theater can yet reduce price and sell more, but a unit drop in price to \$4 will sell to 2 unit of the low value customers, however, the MR ˂ MC Senior’s ticket can sell at \$5 since that is the price at which the profit is maximum, and a discount of 20 percent that is a \$1, can be offered to seniors effectively selling the ticket at \$4 to increase

Salvatore’s chapter 13:

1. Discussion Questions: 8 and 10.
2. Problems: 12, 13, and 15.

Note:

1. P13: Please use the internet search or other sources to answer this problem.
2. P15(b) a lump sum tax is a fixed cost, (c) a \$3 per unit tax is a variable cost which will cause AC and MC to increase by \$3.