10

Set 2: Central Ideas (Advanced)

Explanation

Answer: D

PASSAGE

The following text describes 'Regulatory Capture'. Regulatory capture is a theory associated with public choice economics which describes a failure of government where a regulatory agency, created to act in the public interest, instead advances the commercial or political concerns of the special interest groups it dominates the industry or sector it is charged with regulating. This occurs because the regulated industry has a high stake in the policy outcomes and focuses its resources on influencing the regulator, while the general public is dispersed and ill-informed.

Why does regulatory capture typically occur according to the text?

A. Because regulators are inherently corrupt individuals
B. Because the public actively demands favorable treatment for corporations
C. Because regulated industries focus resources on influencing regulators while the public is dispersed
D. Because the government runs out of money to pay regulators✓ Correct

Detailed Explanation

Choice C is correct. The text attributes it to the fact that 'regulated industry... focuses its resources on influencing the regulator, while the general public is dispersed.'

Key Evidence:

• "focuses its resources on influencing the regulator"

• "public is dispersed and ill-informed"

Why others are wrong: A (Too simplistic (Text focuses on systemic incentives, not character)), B (Opposite), D (Not mentioned).

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