Practise analysing indirect taxes, subsidies, price controls, buffer stocks, direct provision and information through market diagrams, incidence and stakeholder effects.
The diagram shows the effect of an indirect tax imposed on cigarettes. The market is initially in equilibrium at point X .
Which area represents the incidence of the tax on consumers?
A government decides to remove fees for higher education provided by the public sector and the private sector.
What is the consequence of this policy?
Higher education is less likely to be provided by the private sector.
Resources in higher education will be allocated through the price mechanism.
The demand for higher education will be perfectly elastic when the price is zero.
The opportunity cost of higher education to students will be zero.
The table shows the market demand and market supply for kiwifruit over a year.
At a market price of $ 3 per kg there is disequilibrium in the market.
Which action would the government have to take to achieve market equilibrium at a price of $ 3 per kg?
impose an indirect tax of $ 2 per kg on kiwifruit
purchase the entire supply at $ 3 per kg and sell at $ 2 per kg
set a maximum price of $ 3 per kg
subsidise kiwifruit production by $ 2 per kg