A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has. become a captured regulator. engaged in a creative response to regulation. reduced the scope of the lemons problem. shared the gains and pains of regulation.

Suppose farmer lane grows and sells cotton in a perfectly competitive industry. the market price of cotton is $1.64 per kilogram, and his marginal cost of production is $1.44 per kilogram, which increases with output. assume farmer lane is currently earning a profit. can farmer lane do anything to increase his profit in the short run? farmer lane: a. cannot do anything to increase his profit. b. may or may not be able to increase his profit. c. can increase his profit by raising his price. d. can increase his profit by producing more output. e. can increase his profit by shutting down.