3.6 - Government Intervention

Question 1

What do the Competition and Markets Authority (CMA) do?

Answer 1

Work to promote competition for the benefit of consumers and investigate mergers and breaches of UK and EU competition law

Question 2

What are the 4 ways monopolies can be controlled?

Answer 2

• Price regulation
• Profit regulation
• Quality standards
• Performance Targets

Question 3

What are the 3 ways the government can promote competition and contestability?

Answer 3

• Promotion of small businesses
• Deregulation
• Competitive tendering

Question 4

How can the government protect suppliers?

Answer 4

Putting restrictions on monopsony power

Question 5

What is privatisation?

Answer 5

The transfer of assets from the public sector (government) to the private sector
(aim: to revitalise inefficient industries)

Question 6

What is nationalisation?

Answer 6

When private sector company or industry is brought under state control
(owned and managed by the Government)

Question 7

What are the 3 impacts of Government intervention?

Answer 7

• Prevents monopolies charging excessive prices (ensures customers pay fair prices and receive good quality with lots of choice)
• Increase efficiency (by increasing competition)
• Can reduce prices and increase quality (in theory if the government runs a business)