Economics MCQs

Page No. 319

Which side of the market is more likely to lobby government for a price floor ?


athe buyers


bNeither buyers nor sellers desire a price floor.


cthe sellers


d Both buyers and sellers desire a price floor.


View Answer the sellers

A price floor ?


a always determines the price at which a good must be sold


bsets a legal maximum on the price at which a good can be sold


c is not a binding constraint if it is set above the equilibrium price


dsets a legal minimum on the price at which a good can be sold



A binding price ceiling creates?


aa shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price


ba surplus


ca shortage


dan equilibrium


View Answer a shortage

For which of the following products would the burden of a tax likely fall more heavily on the sellers ?


aClothing


bfood


chousing


dentertainment


View Answer entertainment

The burden of a tax falls more heavily on the buyers in a market when ?


a both supply and demand are inelastic


bdemand is elastic, and supply are inelastic


cboth supply and demand are elastic


d demand is inelastic, and supply is elastic



The burden of a tax falls more heavily on the sellers in a market when ?


aboth supply and demand are elastic


bboth supply and demand are inelastic


cdemand is inelastic and supply in elastic


ddemand is elastic, and supply is inelastic



Which of the following takes place when a tax is placed a good ?


aa decrease in the price buyers pay, an increase in the price sellers receive, and a decrease in the quantity sold


b an increase in the price buyers pay a decrease in the price sellers receive, and an increase in the quantity sold


c a decrease in the price buyers pay, an increase in the price sellers receive and an increase in the quantity sold


dan increase in the price buyers pay a decrease in the price sellers receive and a decrease in the quantity sold



Within the supply and demand model, a tax collected from the buyers of a good shifts the ?


asupply curve downward by the size of the tax per unit.


bSupply curve upward by the size of the tax per unit


c demand curve upward by the size of the tax per unit.


ddemand curve downward by the size of the tax per unit



Which of the following statements is true if the government places a price ceiling on petrol at Rs150 per litre and the equilibrium price is Rs100 per litre ?


aA significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.


b A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.


cThere will be a shortage of petrol


dThere will be surplus of petrol



The surplus caused by a binding price floor will be greatest if ?


ademand is inelastic and supply in elastic


bsupply is inelastic, and demand is elastic


cboth supply and demand are elastic


dboth supply and demand are inelastic



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