Final Exam Review Sheet BMGT 289L What is the Proper Role of the Government in a Free Enterprise System The final exam will be given on May 16th from 4 p m to 6 p m in our classroom The exam will be all multiple choice approximately 60 questions Emphasis will be on topics covered since the midterm however I will include a number of questions from the midterm exam on the final exam Topics covered since the midterm include The Role of Government in the Housing Market Regulation Deregulation of Network Industries Deregulation and Social Obligation Environmental Regulation The Government and Information Policy Regulation and Monopoly Power Electric Utility Regulation Deregulation Government s Role in Health Care Five Views of the Role of Business in Ensuring a Viable Future for Market Capitalism and Government Games Understanding the Role of Government in Business Strategy Suggested areas for final exam preparation class notes covering lecture debates case studies and discussion lecture slides and course readings Below are some specific topics that may be included on the final exam The Role of Government in the Housing Market from case study presentation 1 What were the main factors that contributed to the problems in the housing market 2 What role did Fannie Mae and Freddie Mac play in the housing crisis 3 How did home buyers make the problem worse 4 What were the issues associated with documentation support and processing of loan applications 5 How should the government s role in the housing market change 6 What is the appropriate role of the government in the housing market Regulation Deregulation of Network Industries Deregulation and Social Obligation 7 How do managers in the private sector determine the appropriate level of social obligation and social responsibility See Two and One Half Cheers for Capitalism 8 How is this different from the public sector 9 What role do government agencies play in imposing social obligations of regulated firms 10 How does this role change in a deregulated environment 11 Describe the social compact between the government and regulated firms as it relates to social obligation 12 List the primary obligations of regulated firms 1 Restrictions on average prices they can charge 2 Regulatory restrictions on their customer base 3 The duty to serve common carrier obligation often at prices that don t reflect cost of servicing high cost customers 13 Identify the three rationale that might be used to justify social obligations of firms e g philosophical economic network benefits 1 Philosophical citizens of a modern society are entitles to and cannot be productive without access to basic utility services public goods argument 2 Economic network externalities 3 Network benefits when a customer in connected to the network not only does that customer benefit but all other benefit by the fact that they may now communicate with this customer 14 Provide examples of how the social obligation duty to serve works in other sectors of the economy such as railroads and banking Duty to serve means the duty to serve customers in the regulated firms franchise area They also have restrictions on their ability to cancel service Deregulation of U S railroads and the abandonment of unprofitable short line railroads that serve communities U S banking reform and concerns that deregulation would undermine policies such as the Community Reinvestment Act which provided loans to the poorest of communities in return for the right to serve more affluent communities 15 How does social obligation affect privatization decisions as well as decisions by firms to enter new markets Environmental Regulation 16 What are the major goals of environmental policy in the U S 1 To protect the environment for future generations 2 Interfering as little as possible with the efficiency of commerce 3 Or the liberty of people and 4 To limit inequity in who is burdened with environmental costs 17 Be familiar with the history and trends in environmental regulation in the U S Policy grew from environmental movement in the 1960s ad 1970s during which several environmental laws were passed regulating air and water pollution Environmental Protection Agency was established in 1970 in an attempt to consolidate in one agency a variety of federal research monitoring standard setting and enforcement activities to ensure environmental protection High costs of these regulations causes backlash from businesses Since 1970s significant achievements in environmental regulation increase in air and water quality control of hazardous waste Limits on greenhouse gas emission have been proposed but limited progress Prior to 1963 only three legislative initiatives passed in the U S 1899 first law the Refuse Act prohibited the dumping into navigable waterways except with a permit 1963 no less than 23 major pieces of legislation passed dealing with environmental issues including National Environmental Policy Act 1969 18 Describe the role of NEPA as it relates to the environment NEPA established a U S national policy promoting the enhancement of the environment and also established the President s Council on Environmental Quality NEPA s most significant effect was to set up procedural requirements for all Federal government agencies to prepare Environmental Assessments and Environmental Impact Statements EAs and EISs contrain statements of the environmental effects of proposed federal agency actions NEPA s procedural requirements apply to all federal agencies in the executive branch mostly related to licensing actions NEPA doesn t apply to the President Congress or federal courts 19 Be familiar with the goals of NEPA To declare national policy which will encourage productive and enjoyable harmony between man and his environment to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man to enrich the understanding of the ecological systems and natural resources important to the Nation 20 Know the difference between the carrot and the stick in designing and implementing environmental policy Two major policy tools for protecting the environment are rules stick and inducements carrot Rules design standards or performance standards Performance standards specify emission levels Design standards specify exactly how performance standards will be met the exact design of a facility product or process Alternatively government can use inducements or market reform
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