Gov Intervention To Control Monopolies (4) Flashcards

1
Q

Pros of monopolies (2)

A

Natural monopolies will ensure vital services are provided โ€“ able to exploit economies of scale
Supernormal profits can be invested to encourage dynamic efficiency

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2
Q

Cons of monopolies (3)

A

Higher prices charged
Choices limited
X-inefficiency โ€“ not as large incentive to be productively efficient

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3
Q

Methods used by gov (4)

A

Price Regulation
Profit Regulation
Quality Standards
Performance Targets

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4
Q

What price regulation

A

Min + max price

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5
Q

Pros of price regulation (4)

A

Agricultural market is volatile
Min price for cheap alcohol
+ fair prices
+ stock

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6
Q

Cons of price regulation (2)

A

Excess suppply = wastes resources
Excess demand = black market, shortages and queues

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7
Q

Profit regulation cons + pros (5)

A

+ restrict undesirable behaviour
+ Consumer rights act
- More money in facilities and wages = less incentive to innovate
- inflate costs
- time lag

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8
Q

Quality standards pros and cons + examples (4)

A

CE mark = health and safety
Fair trade
- expensive and time consuming = strict criteria
+ competition

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9
Q

Performance targets and example (4+)

A

Rail industry = train company can achieve certain number of delays on daily basis = face fines if overdoes
- canโ€™t invest
+ consumers get best service

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