Lesson 2.11.1

2.11.1 Methods of government intervention in markets Quiz: OCR Economics, Unit 2

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 2.11.1, Methods of government intervention in markets: 20 multiple choice questions for the OCR Economics (H460), Unit 2: The role of markets, written with Revision Ninja.

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The 20 questions

  1. What is the main effect of setting a binding maximum price below equilibrium?

    • Excess demand
    • Market clearing
    • Excess supply
    • Producer surplus growth

  2. Where must a minimum price be set to have an effect on the market?

    • Below equilibrium price
    • Above equilibrium price
    • At zero price
    • At equilibrium price

  3. Which type of tax is levied as a percentage of the price of a good?

    • Ad valorem tax
    • Flat-rate tax
    • Lump-sum tax
    • Specific tax

  4. What happens to the supply curve when a specific indirect tax is imposed on a good?

    • Shifts parallel leftward
    • Pivots leftward
    • Shifts parallel rightward
    • Pivots rightward

  5. What effect does a producer subsidy have on the market supply curve?

    • Pivots leftward
    • Becomes vertical
    • Shifts leftward
    • Shifts rightward

  6. Who bears most of the burden of an indirect tax if demand is highly price inelastic?

    • The government
    • Consumers
    • Foreign exporters
    • Producers

  7. What type of market intervention is Scotland's minimum unit pricing for alcohol?

    • Maximum price
    • Ad valorem tax
    • Minimum price
    • Specific subsidy

  8. If demand is 100 units and supply is 60 units at a price ceiling, what is the shortage?

    • 60 units
    • 100 units
    • 160 units
    • 40 units

  9. What market-based policy sets a cap on total emissions while allowing firms to buy and sell allowances?

    • Hypothecated taxation
    • State provision
    • Maximum pricing
    • Tradeable permits

  10. Why does the government directly provide pure public goods like national defence?

    • Price volatility
    • Free-rider problem
    • Excess demand
    • High elasticity

  11. Which policy addresses market failure caused by asymmetric information regarding healthy food?

    • Information provision
    • Tradeable permits
    • Minimum pricing
    • State ownership

  12. What term describes unexpected negative outcomes resulting from government intervention in a market?

    • Market clearing
    • Regulatory capture
    • Unintended consequences
    • Allocative efficiency

  13. What occurs when a regulatory agency acts in the interest of the firms it is supposed to oversee?

    • Government failure
    • Asymmetric information
    • Moral hazard
    • Regulatory capture

  14. A £2 subsidy reduces price from £10 to £9. What share of the subsidy benefits the consumer?

    • £9
    • £1
    • 50p
    • £2

  15. Which unintended consequence often arises when a maximum price creates a persistent product shortage?

    • Subsidisation
    • Black markets
    • Overproduction
    • Deflation

  16. What is the theoretical effect of a national minimum wage set above equilibrium in a competitive labour market?

    • Unemployment
    • Increased vacancies
    • Wage fall
    • Labour shortage

  17. Why does an ad valorem tax cause the supply curve to pivot?

    • Fixed per unit
    • Tax rises with price
    • Demand is inelastic
    • Costs fall

  18. What intervention involves buying stock when prices are low and selling when prices are high to stabilise markets?

    • Buffer stock scheme
    • Maximum price floor
    • Direct state provision
    • Pollution permit scheme

  19. A subsidy of £3 per unit is paid on 500 units sold. What is the total cost to government?

    • £500
    • £4,500
    • £1,000
    • £1,500

  20. What method of intervention uses legal rules and laws to directly control market behaviour?

    • Regulation
    • Subsidisation
    • Indirect taxation
    • Market force

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