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Market Equilibrium and Government Intervention Quiz

#1

In economics, what does market equilibrium refer to?

A situation where quantity demanded equals quantity supplied
Explanation

Balance between demand and supply

#2

Which of the following is NOT a determinant of demand?

Cost of production
Explanation

Not a factor affecting demand

#3

Which of the following is NOT a type of government intervention in markets?

Free trade agreements
Explanation

Policy supporting open markets

#4

What is the primary objective of a price floor imposed by the government?

To ensure producers receive a minimum price for their goods
Explanation

Guaranteeing minimum prices for producers

#5

What is the term for a price control set by the government to ensure that prices do not rise above a certain level?

Price ceiling
Explanation

Upper limit on prices set by government

#6

What happens to market equilibrium price and quantity when both demand and supply increase?

Price and quantity both increase
Explanation

Dual rise in price and quantity

#7

What is the term used to describe the situation when the quantity supplied exceeds the quantity demanded at a given price?

Surplus
Explanation

Excess supply in market

#8

What effect does a subsidy have on the market equilibrium?

Decreases equilibrium price, increases equilibrium quantity
Explanation

Lower prices, higher quantity due to support

#9

Which of the following is an example of a government intervention that could shift the supply curve in a market?

Regulating pollution emissions
Explanation

Policy influencing production costs

#10

Which of the following is a consequence of a government-imposed price ceiling set below the equilibrium price?

Excess demand
Explanation

Resulting shortage due to price cap

#11

Which of the following is an example of a government intervention that aims to address negative externalities in production?

Imposing a carbon tax
Explanation

Taxing to internalize external costs

#12

Which of the following is NOT a potential consequence of imposing a tariff on imports?

Increase in international trade
Explanation

Opposite effect on trade flow

#13

Which of the following is an example of a government intervention aimed at increasing market competition?

Anti-dumping regulations
Explanation

Measures to prevent unfair competition

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