Practise reasons, methods and effects of government microeconomic intervention, including public goods, indirect taxes, subsidies, price controls, information and inequality policy.
A government wishes to ensure adequate flood defences are provided in its coastal areas.
Which action is most likely to be undertaken only by the government?
building the defences
designing the defences
financing the defences
maintaining the defences
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?
The table shows the income and wealth of Yasmin.
What is the value of Yasmin's wealth?
$ 41000
$ 43000
$ 44000
$ 45000
Which combination of government measures is most likely to increase the consumption of a merit good?
setting an effective maximum price on the product and paying producers a subsidy
setting an effective maximum price on the product and imposing an indirect tax on producers
setting an effective minimum price on the product and paying producers a subsidy
setting an effective minimum price on the product and imposing an indirect tax on producers