Lesson 1.4.2
1.4.2 Government failure Quiz: Pearson Edexcel Economics, Unit 1
20 questions
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Lesson 1.4.2, Government failure: 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
-
Which term describes government intervention leading to a net welfare loss?
- Information failure
- Government failure
- Market failure
- External failure
-
Which of the following is a recognised cause of government failure?
- Positive externalities
- Public goods
- Monopoly power
- Distortion of prices
-
The creation of a black market following price controls is an example of what?
- Regulatory capture
- Information gap
- Unintended consequence
- Administrative cost
-
Which cause of government failure occurs when bureaucracy costs exceed policy benefits?
- Information gaps
- Unintended consequences
- Price signal distortion
- Administrative costs
-
Which cause of government failure occurs when policymakers lack full market data?
- Information gaps
- Unintended consequences
- Regulatory capture
- Administrative costs
-
How can a production subsidy lead to government failure?
- Correcting market failure
- Distorting price signals
- Maximising consumer surplus
- Eliminating moral hazard
-
What market distortion typically results from agricultural price floor policies?
- Market shortages
- Market surpluses
- Rapid deflation
- Excess demand
-
What market outcome is caused by setting a maximum rent ceiling?
- Lower search costs
- Housing shortages
- Housing surpluses
- Excessive supply
-
Which cause of government failure occurs when price controls block supply adjustment?
- Distortion of signals
- Information gaps
- External benefits
- Regulatory capture
-
What cause of government failure occurs when a tax creates unexpected negative side effects?
- Unintended consequences
- Symmetric information
- Price signal distortion
- Administrative efficiency
-
What overall economic outcome must occur for an intervention to be classed as government failure?
- Net welfare gain
- Net welfare loss
- Market equilibrium
- Maximum allocative efficiency
-
What cause of government failure occurs when regulatory bodies act in the interest of firms?
- Perfect competition
- Public good provision
- Internalising externalities
- Regulatory capture
-
Why does the presence of government failure not mean state intervention should be completely avoided?
- Governments always succeed
- Taxes generate equity
- Market failure exists
- Markets are perfect
-
Lacking accurate pollution data when setting regulatory emission limits is an example of what?
- Regulatory capture
- Unintended consequences
- Excessive admin costs
- Information gaps
-
Government failure strictly occurs when government intervention results in what economic effect?
- Net welfare gain
- Higher tax revenue
- Zero opportunity cost
- Net welfare loss
-
Which outcome represents government failure in state healthcare provided free at point of use?
- Deflationary pressure
- Excess supply
- Overproduction of goods
- Long waiting lists
-
A policy that creates unforeseen secondary problems for society is known as what?
- Unintended consequence
- Price signal distortion
- Administrative cost
- Information gap
-
What occurs when a government regulatory agency acts in the interest of incumbent firms?
- Information asymmetry
- Regulatory capture
- Government failure
- Price distortion
-
Which cause of government failure occurs when project expenses far exceed original budgets?
- Excessive administrative costs
- Unintended consequences
- Distortion of price signals
- Information gaps
-
How is government failure defined in terms of overall economic welfare?
- Zero welfare impact
- Net welfare loss
- Net welfare gain
- Pareto efficiency
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