Lesson 3.6.1
3.6.1 Government intervention in business behaviour Quiz: Pearson Edexcel Economics, Unit 3
20 questions
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Lesson 3.6.1, Government intervention in business behaviour: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 3: Theme 3: Business behaviour and the labour market, written with Revision Ninja.
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The 20 questions
-
Which UK regulatory body investigates corporate mergers that may substantially lessen competition?
- Ofcom
- CMA
- Bank of England
- FCA
-
Which regulatory policy sets a maximum ceiling on the prices a monopolist can charge?
- Quality targeting
- Privatisation
- Profit regulation
- Price capping
-
Which form of monopoly regulation restricts a firm's maximum rate of return on invested capital?
- Profit regulation
- Competitive tendering
- Price capping
- Deregulation
-
What is the main purpose of setting performance targets for regulated monopolists?
- Remove entry barriers
- Maximise excess profit
- Encourage vertical integration
- Prevent quality degradation
-
What is the transfer of state-owned assets to the private sector called?
- Deregulation
- Competitive tendering
- Privatisation
- Nationalisation
-
What process involves private firms bidding to deliver public sector services?
- Competitive tendering
- Price capping
- Nationalisation
- Regulatory capture
-
What is the removal of government restrictions to increase competition called?
- Profit regulation
- Monopsony regulation
- Deregulation
- Nationalisation
-
What is the transfer of private assets into state ownership called?
- Deregulation
- Privatisation
- Competitive tendering
- Nationalisation
-
Setting a maximum price limit for a utility company is an example of what?
- Profit regulation
- Price regulation
- Monopsony restriction
- Privatisation
-
Which government policy directly increases contestability by removing legal entry barriers?
- Price capping
- Deregulation
- Rate-of-return regulation
- Nationalisation
-
Why does the government provide grants and support to small businesses?
- Cause regulatory capture
- Promote monopsony power
- Increase monopoly power
- Enhance market competition
-
What is a major disadvantage associated with nationalising a private industry?
- Higher allocative efficiency
- Lower X-efficiency
- Lower taxpayer costs
- Increased market competition
-
Which policy directly limits a firm's monopsony power in the labour market?
- Deregulation
- Price capping
- Privatisation
- National Minimum Wage
-
Why might a regulator cap a monopolist's price at average total cost?
- Ensure normal profit
- Force firm insolvency
- Maximise supernormal profit
- Eliminate allocative efficiency
-
What is a potential negative consequence of strict price caps on regulated firms?
- Reduced investment
- Rapid price inflation
- Higher monopoly profits
- Increased market contestability
-
What action allows a competition authority to approve a merger while maintaining competition?
- Divestment remedies
- Complete deregulation
- Full nationalisation
- Price regulation
-
What happens to consumer surplus when a monopoly price cap lowers price and increases output?
- It remains unchanged
- It decreases
- It falls to zero
- It increases
-
What is the primary difference between nationalisation and regulation?
- Tax rates
- Asset ownership
- Price setting
- Product quality
-
Why might privatising a utility firm fail to increase market competition?
- Low capital barriers
- Natural monopoly features
- High market contestability
- Excessive price capping
-
What is a major risk when local councils use competitive tendering?
- Excessive market contestability
- Guaranteed supernormal profits
- Poorly specified contracts
- Higher tax revenues
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