MCQOPTIONS
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MCQOPTIONS
This section includes 18 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
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 ? |
| A. | A 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. |
| C. | There will be a shortage of petrol |
| D. | There will be surplus of petrol |
| Answer» B. A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint. | |
| 2. |
Which of the following takes place when a tax is placed a good ? |
| A. | a 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 |
| D. | an increase in the price buyers pay a decrease in the price sellers receive and a decrease in the quantity sold |
| Answer» E. | |
| 3. |
Which of the following workers would be most likely to find it more difficult to get a job after a rise in the minimum wage rate? |
| A. | a teenage worker with few qualifications. |
| B. | A manual worker with fifteen years of work experience |
| C. | A professional worker with university degree. |
| D. | All there are equally likely to find it difficult to get a job |
| Answer» B. A manual worker with fifteen years of work experience | |
| 4. |
Which side of the market is more likely to lobby government for a price floor ? |
| A. | the buyers |
| B. | Neither buyers nor sellers desire a price floor. |
| C. | the sellers |
| D. | Both buyers and sellers desire a price floor. |
| Answer» D. Both buyers and sellers desire a price floor. | |
| 5. |
Within the supply and demand model, a tax collected from the buyers of a good shifts the ? |
| A. | supply curve downward by the size of the tax per unit. |
| B. | Supply curve upward by the size of the tax per unit |
| C. | demand curve upward by the size of the tax per unit. |
| D. | demand curve downward by the size of the tax per unit |
| Answer» E. | |
| 6. |
Within the supply and demand model, a tax collected from the sellers of a good shift the ? |
| A. | demand curve downward by the size of the tax per unit. |
| B. | supply curve downward by the size of the tax per unit |
| C. | demand curve upward by the size of the tax per unit. |
| D. | supply curve upward by the size of the tax per unit |
| Answer» E. | |
| 7. |
Which of the following statements about the burden of a tax is correct ? |
| A. | The tax burden generated from a tax placed on a good consumer perceive to be a necessity will fall most heavily on the sellers of the good |
| B. | The burden of a tax falls on the side of the market (buyers or sellers) from which it is collected |
| C. | The distribution of the burden of a tax is determined by the relative elasticities of determined by legislation. |
| D. | The tax burden falls most heavily on the side of the market (buyers and sellers) that is most willing to leave the market when price movements are unf |
| Answer» D. The tax burden falls most heavily on the side of the market (buyers and sellers) that is most willing to leave the market when price movements are unf | |
| 8. |
Which of the following statements about a binding price ceiling is true ? |
| A. | The shortage created by the price ceiling is greater in the short ran than in the long run. |
| B. | The surplus created by the price ceiling is greater in the short run than in the long run |
| C. | The surplus created by the price ceiling is greater in the long run than in the short run |
| D. | The shortage created by the price ceiling is greater in the long run than in the short run |
| Answer» E. | |
| 9. |
Which of the following is an example of price floor ? |
| A. | the minimum wage |
| B. | rent controls |
| C. | restricting petrol prices to Rs100 per litre when the equilibrium price is Rs150 per litre |
| D. | All of these answers are price floors |
| Answer» B. rent controls | |
| 10. |
When a tax is collected from the buyers in a market, ? |
| A. | the tax burden falls most heavily on the buyers. |
| B. | the buyers bear the burden of the tax |
| C. | the sellers bear the burden of the tax |
| D. | the tax burden on the buyers and sellers in the same as an equivalent tax collected from the sellers |
| Answer» E. | |
| 11. |
The surplus caused by a binding price floor will be greatest if ? |
| A. | demand is inelastic and supply in elastic |
| B. | supply is inelastic, and demand is elastic |
| C. | both supply and demand are elastic |
| D. | both supply and demand are inelastic |
| Answer» D. both supply and demand are inelastic | |
| 12. |
The burden of a tax falls more heavily on the buyers in a market when ? |
| A. | both supply and demand are inelastic |
| B. | demand is elastic, and supply are inelastic |
| C. | both supply and demand are elastic |
| D. | demand is inelastic, and supply is elastic |
| Answer» E. | |
| 13. |
The burden of a tax falls more heavily on the sellers in a market when ? |
| A. | both supply and demand are elastic |
| B. | both supply and demand are inelastic |
| C. | demand is inelastic and supply in elastic |
| D. | demand is elastic, and supply is inelastic |
| Answer» E. | |
| 14. |
For which of the following products would the burden of a tax likely fall more heavily on the sellers ? |
| A. | Clothing |
| B. | food |
| C. | housing |
| D. | entertainment |
| Answer» E. | |
| 15. |
For a price ceiling to be binding constraint on the market the government must set it ? |
| A. | above the equilibrium price |
| B. | below the equilibrium price |
| C. | precisely at the equilibrium price |
| D. | at any price because all price ceilings are binding constraints |
| Answer» C. precisely at the equilibrium price | |
| 16. |
A tax placed on a good that is a necessity for consumers will likely generate a tax burden that ? |
| A. | falls more heavily on sellers |
| B. | falls entirely on sellers |
| C. | falls more heavily on buyers. |
| D. | is evenly distributed between buyers and sellers. |
| Answer» D. is evenly distributed between buyers and sellers. | |
| 17. |
A price floor ? |
| A. | always determines the price at which a good must be sold |
| B. | sets 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 |
| D. | sets a legal minimum on the price at which a good can be sold |
| Answer» E. | |
| 18. |
A binding price ceiling creates? |
| A. | a shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price |
| B. | a surplus |
| C. | a shortage |
| D. | an equilibrium |
| Answer» D. an equilibrium | |