Lesson 1.4.1
1.4.1 Government intervention in markets Quiz: Pearson Edexcel Economics, Unit 1
20 questions
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Lesson 1.4.1, Government intervention in markets: 20 multiple choice questions for the Pearson Edexcel Economics (9EC0), Unit 1: Theme 1: Introduction to markets and market failure, written with Revision Ninja.
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The 20 questions
-
What is the primary purpose of government intervention in a market economy?
- To maximise profits
- To promote inequality
- To eliminate scarcity
- To correct market failure
-
Which type of indirect tax is charged as a percentage of the price of a good?
- Corporation tax
- Specific tax
- Income tax
- Ad valorem tax
-
In which direction does a specific tax shift the market supply curve?
- No shift occurs
- To the right
- To the left
- Upward slope change
-
What market outcome occurs when a government sets a minimum price above equilibrium?
- Excess demand
- Market equilibrium
- Price fall
- Excess supply
-
What market outcome occurs when a government sets a maximum price below equilibrium?
- Market equilibrium
- Price rise
- Excess supply
- Excess demand
-
What key feature defines a scheme involving tradable pollution permits?
- State ownership
- A minimum price
- Direct taxation
- A pollution cap
-
Why are tradable pollution permits considered an efficient market-based intervention?
- Prevents market failure
- Minimises abatement costs
- Eliminates all pollution
- Guarantees government profit
-
Which of the following is a classic example of state provision of a public good?
- Higher education
- Public healthcare
- National defence
- Social housing
-
Which form of government intervention is used specifically to correct information gaps?
- State provision
- Indirect taxation
- Maximum prices
- Information provision
-
Which form of government intervention involves setting legally binding rules for firms?
- Subsidies
- Information provision
- Tradeable permits
- Regulation
-
A specific tax is £2 per unit. If 100 units are sold, how much tax revenue is raised?
- £1,120
- £200
- £120
- £80
-
What is a direct market consequence of setting a maximum price below equilibrium?
- Price increase
- Excess demand
- Excess supply
- Market surplus
-
Where must a government set a minimum price for it to affect the market?
- At equilibrium
- At zero price
- Above equilibrium
- Below equilibrium
-
Which policy directly internalises the negative external costs of road congestion?
- Subsidising petrol
- Congestion charge
- Maximum price
- State provision
-
When demand is price inelastic and supply is elastic, who gains most from a subsidy?
- Producers
- Consumers
- Exporters
- The government
-
An indirect tax equal to external costs internalises a negative externality by doing what to private costs?
- Increasing them
- Ignoring them
- Decreasing them
- Eliminating them
-
How does the imposition of an indirect tax affect a market supply curve?
- Shifts it right
- Shifts it left
- Shifts demand right
- Shifts demand left
-
What term describes government intervention that results in a net loss of economic welfare?
- Market failure
- Government failure
- Missing market
- Information asymmetry
-
How does granting a subsidy to producers affect the market supply curve?
- Shifts it left
- Shifts it right
- Makes it vertical
- Causes no movement
-
What market outcome is created when a minimum price is set above equilibrium?
- Market shortage
- Price collapse
- Excess demand
- Excess supply
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