Which of the following best describes a situation where regulatory capture has occurred?
High entry barriers are removed by an independent watchdog to encourage contestability.
A regulatory body acts in the interest of the industry leaders it is supposed to oversee rather than the public.
Regulated firms suffer severe financial penalties and loss of market share due to stricter environmental laws.
The government bypasses regulators to directly implement a price cap in a highly competitive market.
378 exam-style questions on AQA A Level Economics 1.8 The market mechanism, market failure and government intervention in markets, covering 1.8.1 How markets and prices allocate resources, 1.8.2 The meaning of market failure, 1.8.3 Public goods, private goods and quasi-public goods, 1.8.4 Positive and negative externalities in consumption and production, 1.8.5 Merit and demerit goods, 1.8.6 Market imperfections, 1.8.7 Competition policy (A-level only), 1.8.8 Public ownership, privatisation, regulation and deregulation of markets (A-level only), 1.8.9 Government intervention in markets, and 1.8.10 Government failure. Each one has a worked solution and a mark scheme showing where the marks go.