Question #21
Reading: Reading 7 Economics of Regulation
PDF File: Reading 7 Economics of Regulation.pdf
Page: 10
Status: Unattempted
Correct Answer: A
Question
Gordon Futona is evaluating the regulatory burden faced by a company he follows as an equity analyst. Futona makes the following two statements: Statement 1 Prudential supervision is a regulatory tool governments may use to limit potential financial contagion. Statement 2 Antitrust regulation may prevent two companies from merging, but has no power over the pricing policies of firms. Which of Futona's statement(s) are correct?
Answer Choices:
A. Statement 2 only
B. Both statements are correct
C. Statement 1 only
Explanation
Statement 2 is inaccurate: antitrust regulation seeks to address any anti-competitive
behavior, including practices such as discriminatory pricing. Statement 1 is accurate as
given.