Question 1
Regulatory capture is when:
A.
Regulators favour firms B.
Prices are zero C.
Markets are perfect D.
Consumers always win
Question 2
What is meant by shadow markets?
A.
Unregulated illegal markets e.g. after price ceilings. B.
Intervention causes more inefficient allocation — net welfare loss. C.
Cost of designing, monitoring and enforcing policy. D.
Intervention significantly affects price messages.
Question 3
Government failure means intervention:
A.
Eliminates taxes B.
Creates net welfare loss C.
Stops all trade D.
Always improves equity
Question 4
What is meant by government failure?
A.
Overall society worse off after intervention. B.
Cost of designing, monitoring and enforcing policy. C.
Intervention causes more inefficient allocation — net welfare loss. D.
Outcomes not foreseen by policymakers.
Question 5
What is meant by distortion of price signals?
A.
Intervention significantly affects price messages. B.
Overall society worse off after intervention. C.
Market in disequilibrium. D.
Intervention causes more inefficient allocation — net welfare loss.
Question 6
What is meant by net welfare loss?
A.
Regulator acts in firms' interests not consumers'. B.
Market in disequilibrium. C.
Outcomes not foreseen by policymakers. D.
Overall society worse off after intervention.
Question 7
What is meant by information gaps?
A.
Overall society worse off after intervention. B.
Market in disequilibrium. C.
Government lacks data for rational decisions. D.
Intervention significantly affects price messages.
Question 8
What is meant by allocative inefficiency?
A.
Market in disequilibrium. B.
Regulator acts in firms' interests not consumers'. C.
Intervention significantly affects price messages. D.
Outcomes not foreseen by policymakers.
Question 9
What is meant by regulatory capture?
A.
Intervention significantly affects price messages. B.
Government lacks data for rational decisions. C.
Regulator acts in firms' interests not consumers'. D.
Unregulated illegal markets e.g. after price ceilings.
Question 10
What is meant by administration costs?
A.
Regulator acts in firms' interests not consumers'. B.
Intervention causes more inefficient allocation — net welfare loss. C.
Cost of designing, monitoring and enforcing policy. D.
Outcomes not foreseen by policymakers.
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