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Free CIMAPRA17-BA1-1 Exam Braindumps
BA1 - Fundamentals of Business Economics Questions 186–190 (page: 39)

Updated On: 9-Feb-2026
Page 39 of 95
PDF with 468 Questions

When the government intervenes in the market economy to correct a market failure

  1. Economic welfare always increases
  2. The problem of government failure may result
  3. In all cases the market mechanism ceases to function
  4. The intervention always creates a surplus

Answer(s): B



Firms may suffer from X-inefficiency because of organizational slack. All of the following would lead to organizational slack except which one?

  1. Uncertainty about future demand
  2. Managers become more cautious
  3. A complex organizational structure in the firm
  4. The number of rival firms increases

Answer(s): D



All of the following are arguments for privatizing a public sector industry except which one?

  1. The profit motive will make the industry more efficient
  2. The industry will respond more to consumer wishes and preferences
  3. The industry is a natural monopoly
  4. Competition will force the industry to become more efficient

Answer(s): C



All of the following are examples of externalities except which one?

  1. Pollution resulting from a production process
  2. Firms training workers who then move to other employers
  3. Some consumers being unable to afford goods because prices have been driven up by the demand from other consumers
  4. Road congestion caused by rush hour traffic on the roads

Answer(s): C



A train company acknowledges that externalities may reduce the welfare of its customers when it provides

  1. Restaurant cars in its trains
  2. Smoking and non-smoking carriages
  3. Reserved seats for disabled passengers
  4. Discounted prices for season-ticket holders

Answer(s): C



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