Question

1. during our bilateral meeting yesterday, commissioner shibata of the japanese fair trade commission shared with me a recent study by our national bureau of economic research showing how deregulation contributed to the growth of the british economy over the last twenty years. in the united states, we have found that deregulation has reduced prices by as much as 30 - 75 percent in many key sectors as it forced those industries to restructure in order to become more efficient.

according to kolask, how does deregulation affect a market economy? e.3.2
\the role of competition in promoting dynamic markets and economic growth\ by deputy assistant attorney general william j. kolask
u.s. department of justice, antitrust division
a. it increases the autonomy of business owners while reducing competition in the marketplace.
b. it decreases the autonomy of business owners while expanding competition in the marketplace.
c. it decreases government oversight, which lowers prices and improves productivity.
d. it increases government oversight, which raises prices and reduces productivity.

Explanation:

Deregulation typically reduces government control, allowing more market - driven competition. When there is less government oversight (as in deregulation), businesses have more freedom to operate. This increased freedom can lead to more competition in the marketplace as barriers to entry may be reduced, and existing firms can innovate and expand more easily. Options C and D suggest increased government oversight which is contrary to deregulation. Option B implies a decrease in business autonomy which also goes against the concept of deregulation (where businesses should have more control). Option A, increasing business autonomy while reducing competition in the marketplace, is incorrect because deregulation is generally associated with promoting competition.

Answer:

A. It increases the autonomy of business owners while reducing competition in the marketplace.
B. It decreases the autonomy of business owners while expanding competition in the marketplace.
C. It decreases government oversight, which lowers prices and improves productivity.
D. It increases government oversight, which raises prices and reduces productivity.