#1
Which of the following is an example of a price ceiling?
Rent control
ExplanationGovernment-imposed limit on maximum allowable prices.
#2
What is the term for a situation where one firm dominates the market and controls prices and supply?
Monopoly
ExplanationSingle seller with significant market power.
#3
Which of the following is an example of a public good?
National defense
ExplanationNon-excludable and non-rivalrous good provided by the government.
#4
What is the term for a maximum price set by the government to prevent prices from rising above a certain level?
Price ceiling
ExplanationGovernment-imposed cap on product or service prices.
#5
Which of the following is a form of direct government intervention in markets?
Price controls
ExplanationGovernment regulation of prices through methods like price floors and ceilings.
#6
Which of the following is an example of a negative externality?
Pollution from a factory
ExplanationHarmful side effects of an economic activity affecting others negatively.
#7
What is the term for a situation where a few large firms dominate an industry?
Oligopoly
ExplanationMarket structure with a small number of large firms.
#8
What is the main goal of government intervention in markets?
To achieve allocative efficiency
ExplanationEnsuring resources are allocated efficiently to maximize overall societal welfare.
#9
Which of the following is a form of indirect taxation?
Sales tax
ExplanationTax levied on the sale of goods and services.
#10
What is the term for a tax that takes a larger percentage of income from high-income earners than from low-income earners?
Progressive tax
ExplanationTax rate increases as income rises.
#11
What does 'deadweight loss' refer to in the context of government intervention?
All of the above
ExplanationLoss of economic efficiency due to government intervention.
#12
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationFirms differentiate products to gain a competitive edge.
#13
What does the term 'externality' refer to in economics?
The unintended side effects of an economic activity on third parties
ExplanationSpillover effects on parties not directly involved in an economic transaction.
#14
Which of the following is NOT a tool of fiscal policy?
Monetary policy
ExplanationGovernment use of taxation and spending to influence the economy.
#15
In the context of externalities, what does a Pigouvian tax aim to do?
Discourage the production of goods with negative externalities
ExplanationTax designed to internalize external costs and reduce socially undesirable activities.
#16
What is the term for a situation where a firm charges different prices to different customers for the same product or service?
Price discrimination
ExplanationCharging different prices based on consumer characteristics.
#17
What is the term for a situation where the government allows prices to be determined by supply and demand with little to no interference?
Market economy
ExplanationEconomic system where prices are set by market forces.
#18
Which of the following is an example of a regressive tax?
Sales tax
ExplanationTax that takes a higher percentage from low-income earners.
#19
What is the term for a situation where a firm's average cost decreases as it produces more?
Economies of scale
ExplanationReduction in average cost per unit as production quantity increases.