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Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?
  • a)
    Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.
  • b)
    In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.
  • c)
    Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.
  • d)
    Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.
Correct answer is option 'C'. Can you explain this answer?
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Government deregulation of the long-distance telephone business has re...
Directly challenges the assumption made in the passage that market forces will drive telephone companies to cut corners on customer service in order to cut costs, because (c) implies that market forces will give these companies at least as much of an incentive to improve customer service as to cut costs. None of the other answers challenge this assumption. The cost savings mentioned in (a) and (d) do not actually give the companies any incentive to devote more resources to customer service.
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PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. According to the passage, how does a foreign investor dominate the relevant domestic market?1. Multinational companies get accustomed to domestic laws.2. Foreign companies establish joint ventures with domestic companies.3. Affiliates in a particular market/sector lose their independence as their parent companies overseas merge.4. Foreign companies lower the cost of their products as compared to that of products of domestic companies. Which of the statements given above are correct?

PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. What is the inference from this passage?

PASSAGE IIIThe need for Competition Law becomes more evident when foreign direct investment (FDI) is liberalised. The impact of FDI is not always pro-competitive. Very often FDI takes the form of a foreign corporation acquiring a domestic enterprise or establishing a joint venture with one. By making such an acquisition the foreign investor may substantially lessen competition and gain a dominant position in the relevant market, thus charging higher prices. Another scenario is where the affiliates of two separate multinational companies (MNCs) have been established in competition with one another in a particular developing economy, following the liberisation of FDI. Subsequently, the parent companies overseas merge. With the affiliates no longer remaining independent, competition in the host country may be artificially inflated. Most of these adverse consequences of mergers and acquisitions by MNCs can be avoided if an effective competition law is in place. Also, an economy that has implemented an effective competition law is in a better position to attract FDI than one that has not. This is not just because most MNCs are expected to be accustomed to the operation of such a law in their home countries and know how to deal with such concerns but also that MNCs expect competition authorities to ensure a level playing field between domestic and foreign firms.Q. With reference to the passage, consider the following statements:1. It is desirable that the impact of Foreign Direct investment should be pro-competitive.2. The entry of foreign investors invariably leads to the inflated prices in domestic markets.Which of the statements given above is/are correct?

Passage - 2Net profits are only 2.2% of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the State-led entrepreneurship played an important role in triggering Indias industrialization, our evolving development needs, comparatively less-than-satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce competition policies would suggest that the time has come to review the role of public sector.What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance-sheet of the State. If the government did not own rural roads, they would not exist.Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement of forest cover will have to be a new priority for the public sector assets.Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market which demonstrates there is no gap in technology. Indian companies are buying up global steel companies, which shows there is no gap in capital availability. Under these conditions, private ownership works best.Private ownership is clearly desirable in regulated industries, ranging from, finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution - government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the tax payer is ever present. There is also the conflict of interest between government as an owner and as the regulator.The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action.Q.The portfolio composition of the government refers to

Passage - 2Net profits are only 2.2% of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the State-led entrepreneurship played an important role in triggering Indias industrialization, our evolving development needs, comparatively less-than-satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce competition policies would suggest that the time has come to review the role of public sector.What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance-sheet of the State. If the government did not own rural roads, they would not exist.Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement of forest cover will have to be a new priority for the public sector assets.Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market which demonstrates there is no gap in technology. Indian companies are buying up global steel companies, which shows there is no gap in capital availability. Under these conditions, private ownership works best.Private ownership is clearly desirable in regulated industries, ranging from, finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution - government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the tax payer is ever present. There is also the conflict of interest between government as an owner and as the regulator.The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action.Q.According to the passage, rural roads should be in the domain of public sector only. Why?

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Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer?
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Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer?.
Solutions for Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. 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Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Government deregulation of the long-distance telephone business has resulted in increased competition among telephone carriers, thus resulting in lower prices for consumers. This process, however, will ultimately result in lower-quality service for consumers, because as the telephone carriers drop their prices to compete with one another for customers, they will be forced to cut corners on nonessential items like customer service.Which of the following, if true, casts the most doubt on the argument that government deregulation of the telephone business will result in lower-quality customer service?a)Technological advances have decreased the cost of providing long-distance telephone service to less than one-half of its cost prior to deregulation.b)In a customer survey regarding the electric utility business, another industry that recently went through deregulation, surveyors found that customer dissatisfaction with service was 30 percent higher than prior to deregulation.c)Customers have listed poor customer service as their number one reason for switching from one longdistance telephone service provider to another.d)Some companies have decreased the cost of customer service by installing automated telephone response systems that eliminate the need for expensive live employees.Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.
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