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| 1 | |
_____________ is the acquisition of private companies by the public sector. |
| | A) | Privatisation |
| | B) | Nationalisation |
| | C) | Collectivisation |
| | D) | Commercialisation |
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| 2 | |
Privatization is the return of _____ enterprises to _____ ownership and control. |
| | A) | state, private |
| | B) | private, state |
| | C) | collective, private |
| | D) | private, collective |
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| 3 | |
A two-part tariff charges a fixed sum for access to the service and then a price per unit that reflects the marginal cost of production. |
| | A) | True |
| | B) | False |
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| 4 | |
____________ implies that the regulator gradually comes to identify with the interests of the firm it regulates. |
| | A) | Regulatory capitulation |
| | B) | Administrative capture |
| | C) | Regulatory capture |
| | D) | Regulatory sell-off |
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| 5 | |
The ________ rate is the interest rate used to calculate present values of future streams of benefits and costs. |
| | A) | retail |
| | B) | wholesale |
| | C) | mortgage |
| | D) | discount |
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| 6 | |
Peak load pricing is price ______________ which charges peak-time users extra because of the ______ marginal cost of supplying them. |
| | A) | discrimination, higher |
| | B) | increase, lower |
| | C) | reduction, higher |
| | D) | increase, higher |
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| 7 | |
‘RPI –(minus) X’ is a _______ . |
| | A) | chemical formula |
| | B) | popular singer |
| | C) | limit on price increases |
| | D) | household cleaner |
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| 8 | |
The problem posed by a natural monopoly is that it faces a ___________ . This means that ____________. |
| | A) | increasing average cost curve, marginal cost lies above average cost |
| | B) | increasing average cost curve, marginal cost lies below average cost |
| | C) | decreasing average cost curve, marginal cost lies above average cost |
| | D) | decreasing average cost curve, marginal cost lies below average cost |
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| 9 | |
State-run firms should price at _____________ and invest until price just covers ___________. |
| | A) | marginal social benefit, marginal cost |
| | B) | average social cost, long run marginal social cost |
| | C) | marginal social cost, long run marginal social cost |
| | D) | below marginal cost, long run marginal cost |
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| 10 | |
When a regulator becomes champion of the industry that it is supposed to regulate it is known as regulatory capitulation. |
| | A) | True |
| | B) | False |
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| 11 | |
Investment decisions in state owned firms should use ______________of costs and benefits and the ____________discount rate. |
| | A) | private valuation, private |
| | B) | social valuation, social |
| | C) | private valuation, social |
| | D) | social valuation, private |
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| 12 | |
In the long run, public companies should set price equal to: |
| | A) | the long run marginal cost. |
| | B) | the opportunity cost. |
| | C) | the total cost. |
| | D) | the average cost. |
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| 13 | |
The practice of some phone companies to price calls by time of day is an example of: |
| | A) | average cost pricing |
| | B) | cost plus pricing |
| | C) | price skimming |
| | D) | peak load pricing |
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| 14 | |
The privatization of public assets at a price reflecting their true value, increases government wealth. |
| | A) | True |
| | B) | False |
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| 15 | |
The expected benefits of privatization are: |
| | A) | avoidance of government intervention. |
| | B) | greater commercial self-reliance. |
| | C) | productivity improvements resulting from competitive pressures. |
| | D) | all of the above. |
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| 16 | |
The Public Finance Initiative (PFI) is where the government uses private finance to build projects and private management to run them. |
| | A) | True |
| | B) | False |
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| 17 | |
A reason for the regulation of privatised utilities is that in the absence of regulation _____________. |
| | A) | the firms would act as monopolies |
| | B) | the firms would not seek to maximise profits |
| | C) | the firms would price below marginal cost |
| | D) | the firms would not pay their fare share of taxes |
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| 18 | |
Privatisation in the UK shows that privatized utilities can be left to trade like any other company. |
| | A) | True |
| | B) | False |
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| 19 | |
The main task of the regulator of a private sector utility is to: |
| | A) | implement government policy. |
| | B) | speak on behalf of the company. |
| | C) | ensure it behaves in the public interest. |
| | D) | undertake important work for the company. |
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