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Economics (AS & A Level) · Oct / Nov 2021 · Paper 12 · Question 14

9708Government policies to achieve efficient resource allocation and correct market failure

A nationalised industry is privatised. Assuming there is no change in the output of the industry in the short run, what are the direct effects of the change?

  1. Asize of public sector: decreases; proportion of industry output entering the market: increases
  2. Bsize of public sector: decreases; proportion of industry output entering the market: no change
  3. Csize of public sector: no change; proportion of industry output entering the market: increases
  4. Dsize of public sector: no change; proportion of industry output entering the market: no change

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Correct answer: B. size of public sector: decreases; proportion of industry output entering the market: no change

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