#1
In economics, what is the primary aim of market interventions?
To correct market failures
ExplanationInterventions aim to address inefficiencies like monopolies.
#2
Which of the following is an example of a market intervention?
Implementing a price floor on agricultural products
ExplanationPrice floors set a minimum price, affecting supply and demand.
#3
What is the primary objective of a subsidy in a market?
To encourage production or consumption of a good
ExplanationSubsidies aim to make goods more affordable or attractive.
#4
Which of the following is an example of an indirect tax?
Income tax
ExplanationLevied on income, not directly on goods or services.
#5
What is the economic term for a situation where a single buyer or seller has significant influence over market prices?
Monopoly
ExplanationResults in price-setting power and reduced competition.
#6
What is the main goal of welfare analysis in economics?
To maximize social welfare
ExplanationIt aims to find policies that benefit society overall.
#7
Which economic concept is used to measure the loss of economic efficiency due to market distortions?
Deadweight loss
ExplanationReflects inefficiency caused by market interventions.
#8
What is the economic rationale behind the implementation of a quota in a market?
To limit the quantity of a good that can be imported or exported
ExplanationControls supply to influence prices or protect domestic industries.
#9
Which of the following is NOT a tool of market intervention typically used by governments?
Perfect competition
ExplanationPerfect competition is an ideal, not a policy intervention.
#10
What effect does a minimum wage policy typically have on unemployment in the labor market?
Increases unemployment
ExplanationCan lead to job losses as labor becomes more expensive for employers.
#11
Under what circumstances might a government implement a price ceiling in a market?
To prevent prices from rising above a certain level
ExplanationTo protect consumers from excessive price increases.
#12
What is the main drawback of rent controls in housing markets?
Decrease in housing quality
ExplanationCan lead to underinvestment and deterioration of rental properties.
#13
What is the primary concern regarding the use of tariffs in international trade?
Possibility of trade wars
ExplanationTariffs can provoke retaliatory measures from trading partners.
#14
What is the economic term for a situation where one party has more information than the other party in a transaction?
Asymmetric information
ExplanationCan lead to market inefficiencies and adverse selection.
#15
What is the primary concern regarding the tragedy of the commons?
Overconsumption and depletion of common resources
ExplanationShared resources exploited without regulation leading to depletion.