Economics MCQs

Page No. 249

Which of the following is the government most likely to subsidies ?


aNegative externalies


b Positive externalities


c Monopolies


d Oligopolies



The government is considering placing a tax on cigarettes to raise revenue to finance health-care benefits. The demand for cigarettes is price inelastic Which of the following statements is True ?


aThis tax will not raise much revenue either in the short term or the long term since demand is price inelastic


b The tax on cigarettes may not raise as much revenue as anticipated in the years to com because the demand for cigarettes is likely to become more elastic over time.


cThis a very good way to raise revenue both in the short term and in the long term, because there are no substitutes for cigarettes.


dNo tax revenue can be raised in this way because sellers of cigarette will just lower their price by the amount of the tax and therefore, the price of cigarettes to consumers will not change



If a government were to fix a minimum wage for adult workers, economists would predict ?


awages in general would fall as employers tried to hold down costs


b fewer young workers would be employed


c the costs and prices of firms employing cheap labour would increase


dthere would be more unemployment



In a free market system rationing occurs when there are increases in ?


aprice


bquantity


cdemand


dsupply


View Answer supply

Economics say that there has to be some from of rationing whenever ?


a inflation occurs


b there are externalities


cmerit goods are produced


dthere is excess demand



If a maximum price is set below equilibrium there will be ?


aA price fall


bA price increase


c Excess supply


dExcess demand


View Answer Excess supply

A public good ?


a Is provided by the government


b Is free


cHas the properties of being non-excludable and non-diminishable


dGas external costs



Agricultural prices tend to be unstable because ?


aSupply is price elastic


bDemand is price elastic


c Supply is stable


d Demand and supply are price inelastic



If the price in a market is fixed by the government above equilibrium ?


a There is excess equilibrium


bThere is excess supply


cThere is excess demand


dThere is equilibrium



A positive externality occurs when ?


a The social marginal costs are higher than the private marginals costs


bA product is not provided in the free market


c The social marginal cost equal the social marginal benefit


dThe social marginal benefits are higher than the private marginal benefits



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