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