Question

Which of the following is an explanation of the capture theory​? A. When products have too many warning labels comma consumers may not read any of them. B. People who have been in an industry are most likely to be asked to be regulators of the industry. C. Regulators who are interested in keeping their jobs must please both the industry and consumers. D. In some​ markets, sellers have more information about products than buyers.

Answer 1

Answer: B. People who have been in an industry are most likely to be asked to be regulators of the industry.

Explanation:

The Capture Theory or Regulatory Capture refers to a situation where the agencies that are supposed to be regulating an industry come under the influence of the companies they are meant to be regulating.

This leads to a situation where the Agencies make regulations that favour these companies instead of the consumer.

One key way this occurs is the REVOLVING DOOR. This is known as the tendency of professionals to move between Government and Private jobs. Simply put, a professional could work in an industry and then go on to work in an Agency regulating that industry. Once this happens, the once private citizens could start influencing the Agencies in favour of their previous bosses.