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Chapter 9: Public Ownership (page 327)

What does the term "nationalization" mean?

Short Answer

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a government publicly acquiring an asset

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Public Ownership

When a government acquires assets such as machinery, factories, railways, or others, this process is then called nationalization. In summary, industries that are "publicly" owned or state-owned are referred to as nationalized industries.

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Most popular questions from this chapter

What are the features of privatization when being implemented on a state owend firm?

The United States currently imports all of its coffee. The annual demand for coffee by U.S. consumers is given by the demand curveQ= 250 - 10P, whereQis quantity (in millions of pounds) andPis the market price per pound of coffee. World producers can harvest and ship coffee to U.S. distributors at a constant marginal (= average) cost of $8 per pound. U.S. distributors can in turn distribute coffee for a constant $2 per pound. The U.S. coffee market is competitive. Congress is considering a tariff on coffee imports of $2 per pound.

a. If there is no tariff, how much do consumers pay for a pound of coffee? What is the quantity demanded?

b. If the tariff is imposed, how much will consumers pay for a pound of coffee? What is the quantity demanded?

c. Calculate the lost consumer surplus.

d. Calculate the tax revenue collected by the government.

e. Does the tariff result in a net gain or a net loss to society as a whole?

In Example 9.1 (page 332), we calculated the gains and losses from price controls on natural gas and found that there was a deadweight loss of $5.68 billion. This calculation was based on a price of oil of $50 per barrel.

a. If the price of oil were $60 per barrel, what would be the free-market price of gas? How large a deadweight loss would result if the maximum allowable price of natural gas were $3.00 per thousand cubic feet?

b. What price of oil would yield a free-market price of natural gas of $3?

You know that if a tax is imposed on a particular product, the burden of the tax is shared by producers and consumers. You also know that the demand for automobiles is characterized by a stock adjustment process. Suppose a special 20-percent sales tax is suddenly imposed on automobiles. Will the share of the tax paid by consumers rise, fall, or stay the same over time? Explain briefly. Repeat for a 50-cents-per-gallon gasoline tax.

What is 1 advantage of public ownership?

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