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Preliminary Exam CSAT May 09

1. It is easy for the government to control State-owned companies through nods and winks. So what really needs to be done as first step is to put petrol pricing on a transparent formula - if the price of crude is x and the exchange rate y, then every month or fortnight, the government announces a maximum price of petrol, which anybody can work out from the x and Y. The rule has to be worked out to make sure that the oil-marketing can, in general, cover their costs. This will mean that if one company can innovate and cut costs, it will make greater profits. Hence, firms will be more prone to innovate and be efficient under this system. Once the rule is announced, there should be no interference by the government. If this is done for a while, private companies will re-enter this market. And once a sufficient number of them are in the fray, we can remove the rule-based pricing and leave it truly to the market (subject to, of course, the usual relations of anti-trust and other competition laws).

Consider the following statements

According to the passage, private oil companies re-enter the oil producing market if

a transparent rule-based petrol pricing exists.

There is no government interference in the oil producing market.

subsidies are given by the government.

regulations of anti-trust are removed .

Which of the statements given above are correct?

(a) 1 and 2 (b) 2 and 3 (c) 3 and 4 (d) 2 and 4

General Studies

Political Science and International Relations

Sociology

Some Reference Essays

List of previous year essay topics (1997-2019)

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