Question

(Type answer)

A)

Briefly explain regulation in the case of a natural monopoly. Provide 3 common examples of regulation. Briefly discuss the benefits of privatization set out in the text and explain what is required for privatization of a nationalized asset in order for privatization to work well.

B)

Briefly discuss what the poverty rate, including what it is, how it is determined, and how this relates to the near poor.

C)

List the variety of policy tools available to government for increasing the rate of return for new technology and encouraging its development.

Answer 1

A.
Natural monopoly refers to the monopoly that arises of natural market forces. In natural monopoly, a single firm supplies product at low cost. This is because under natural monopoly, fixed costs are high compared to variable costs. Thus one firm can able to supply product at lower cost in the market.
The public utility services like Water supply, electiricity, natural gas and railways are the classic examples of Natural Monopoly.

Natural Monopoly can provide products at low cost by considering government regulations. The examples of regulating natural monopoly are price regulation, regulating through Marginal Cost pricing and government incentives mechanism.
Thus the benefits of privatisation can visible in the form large economies of scale and consmer gets low cost services .

B.
Poverty refers to unattainment of basic necessities of life. It includes poor health and education, unemployment, lack of skills and poor standard of living.
The concept of near poverty indicates the borderline poverty where one is just above the minimum requirements. There is every chance of near poverty group to be included in the absolute poverty group if they are not properly protected.

C.
There are various policy tools available to government for increasing the rate of return for new technology and encouraging its development. The technological advancement helps in reducing working hours and cost of production. The efficient management of proper technology brings efficiency and profitability. Government always provides better opportunities for the adoption of latest sophisticated technology in production process.
The policy of automation in production process, mechanisation and cost reduction mangement also stood for the adoption of latest techincal in every aspects of production.