IB Econ: Government Intervention Quiz

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Intervention tools & demand elasticity

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Ms Marsden

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IB Econ: Government Intervention Quiz


IB Econ: Government Intervention QuizVersión en línea Intervention tools & demand elasticity por Ms Marsden 1 Which is the primary purpose of a subsidy in a domestic market? a Raise consumer prices b Increase government revenue c Lower production costs for producers d Reduce imports 2 If an indirect tax is imposed, who bears most of the tax burden in a perfectly inelastic supply? a The government b Firms’ shareholders c Producers d Consumers 3 A price floor above equilibrium creates which outcome? a Equilibrium price rises to match floor b Shortage of the good c No change in quantity d Surplus of the good 4 What happens to consumer surplus when a price ceiling is set below equilibrium? a No change b It increases c It doubles the price d It decreases 5 Price elasticity of demand (PED) measures how quantity demanded responds to price: PED > 1 means? a Inelastic demand b Elastic demand c Unitary elasticity d Perfectly elastic demand 6 A government uses a subsidy on a merit good. Which outcome is likely? a Increased consumption and welfare b Higher prices for consumers c Unchanged market quantity d Reduced producer profit 7 If a tax reduces the quantity traded from Q1 to Q2, what happens to government revenue? a It may rise or fall depending on tax size b It always falls c It is unaffected by quantity d It always rises 8 How does a price ceiling typically affect shortages and allocations? a Causes shortages and non-price rationing b Causes surpluses and price targeting c Always clears the market d Eliminates shortages 9 Which intervention most directly corrects a positive externality in consumption? a Subsidies for consumers b Quota on production c Price ceiling d Direct regulation 10 Inelastic PED with a tax leads to: a No tax revenue b Tax revenue unchanged c Tax burden primarily on consumers d Tax burden on producers

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IB Econ: Government Intervention Quiz

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IB Econ: Government Intervention QuizVersión en línea

por Ms Marsden

Which is the primary purpose of a subsidy in a domestic market?

If an indirect tax is imposed, who bears most of the tax burden in a perfectly inelastic supply?

A price floor above equilibrium creates which outcome?

What happens to consumer surplus when a price ceiling is set below equilibrium?

Price elasticity of demand (PED) measures how quantity demanded responds to price: PED > 1 means?

A government uses a subsidy on a merit good. Which outcome is likely?

If a tax reduces the quantity traded from Q1 to Q2, what happens to government revenue?

How does a price ceiling typically affect shortages and allocations?

Which intervention most directly corrects a positive externality in consumption?

Inelastic PED with a tax leads to: