State Provision

The video explores state provision as a form of government intervention in markets, explaining its impact on demand and supply. It discusses reasons for government intervention, such as public goods, merit goods, natural monopolies, and political motives. The video also examines the historical context of nationalisation and privatisation in the UK, highlighting political influences. Finally, it addresses issues related to state provision, including inefficiency and resource allocation challenges.

What is the primary role of state provision in a mixed economy?

• To ensure all goods are provided by the state

• To promote international trade

• To balance free markets with government intervention

• To eliminate all forms of private enterprise

In a demand and supply diagram, how does state provision affect the supply curve?

• It makes the supply curve vertical

• It has no effect on the supply curve

• It makes the supply curve horizontal

• It shifts the supply curve to the left

Which of the following is NOT a reason for government intervention through state provision?

• Natural monopolies

• Merit goods

• Public goods

• Increasing private sector profits

Why might public goods not be provided in a free market?

• They are too expensive to produce

• They suffer from the free rider problem

• They are illegal to produce privately

• They are not in demand

What is a key characteristic of merit goods?

• They have positive externalities

• They have negative externalities

• They are overprovided by the market

• They are only consumed by the wealthy

Why does the government provide natural monopolies like railway tracks?

• To increase prices

• To avoid duplication of infrastructure

• To exploit monopoly power

• To prevent competition

How does state provision address the principal-agent problem in education?

• By making education optional

• By allowing parents to decide

• By making education compulsory

• By providing financial incentives

What political party in the UK is traditionally associated with nationalisation?

• The Liberal Democrats

• The Green Party

• The Labour Party

• The Conservative Party

Which Prime Minister is known for reversing nationalisation policies in the UK?

• Clement Attlee

• David Cameron

• Margaret Thatcher

• Winston Churchill

What is a potential downside of state provision?

• It guarantees innovation

• It may lead to inefficiency

• It encourages excessive competition

• It always results in lower prices