June P2 Hard

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What is the primary function of prices in a market economy?

To generate revenue for the government
To allocate resources efficiently among producers (correct)
To redistribute wealth among consumers
To signal the availability of goods and services

Which of the following is a characteristic of imperfect markets?

No barriers to entry
The presence of a single buyer or seller (correct)
A large number of buyers and sellers
Full information availability

What is the relationship between price and quantity demanded according to the Law of Demand?

No relationship exists
Direct and proportional
Inverse and proportional (correct)
Direct and inversely proportional

What is the primary difference between consumer markets and factor markets?

The type of goods exchanged (D) Signup and view all the answers

What is the definition of utility in the context of markets?

The satisfaction a consumer derives from a good or service (C) Signup and view all the answers

Which of the following is a characteristic of perfect markets?

A large number of buyers and sellers (A) Signup and view all the answers

What is the term for the system where buyers and sellers interact to trade goods and services?

Market (C) Signup and view all the answers

According to the Law of Supply, what is the relationship between price and quantity supplied?

Direct and proportional (D) Signup and view all the answers

What is the primary objective of setting minimum and maximum price levels in an economy?

To ensure producers receive a fair price and consumers can afford essential goods (D) Signup and view all the answers

What is the likely effect of a price floor that is set too high?

A surplus of the good (A) Signup and view all the answers

What is the main purpose of social safety nets in a welfare system?

To support individuals who are unable to participate fully in the economy (C) Signup and view all the answers

Why might a government engage in state production of goods and services?

To maintain strategic control in vital sectors (D) Signup and view all the answers

What is the Production Possibility Curve (PPC) used to illustrate?

The trade-offs and opportunity costs associated with resource allocation (B) Signup and view all the answers

What is the implication of a concave PPC?

Increasing opportunity costs (C) Signup and view all the answers

What would cause an outward shift in the PPC?

An improvement in technology (B) Signup and view all the answers

What do indifference curves represent?

Different combinations of two goods that provide the same level of satisfaction (A) Signup and view all the answers

Why might governments privatize state-owned enterprises?

To promote economic efficiency and reduce public sector burdens (B) Signup and view all the answers

What is the key challenge for governments in implementing public sector interventions?

Maintaining economic efficiency and growth (A) Signup and view all the answers

What is the primary reason for government intervention in markets?

To correct market failures and promote efficient resource allocation (C) Signup and view all the answers

Which of the following is NOT a cause of market failures?

Perfect competition (A) Signup and view all the answers

What is the primary objective of environmental regulations?

To prevent businesses from causing irreversible environmental damage (B) Signup and view all the answers

What is the result of inefficiencies in resource allocation?

The economy operates at a suboptimal position on the PPC curve (A) Signup and view all the answers

What is the role of indifference curves in understanding consumer preferences?

They help in understanding the impact of changes in income or prices on consumption choices (B) Signup and view all the answers

What is the primary objective of government policies aimed at correcting market failures?

To move the economy towards the PPC, representing efficient utilization of resources (B) Signup and view all the answers

What is the effect of high inflation rates on the economy?

It erodes purchasing power and destabilizes the economy (D) Signup and view all the answers

What is the primary tool used by central banks to control inflation?

Monetary policy (A) Signup and view all the answers

What is the primary function of markets in regards to resource allocation?

To determine what goods and services are produced and consumed based on collective consumer preferences (B) Signup and view all the answers

Which of the following is NOT a reason for public sector intervention in the economy?

To maximize profit for private corporations (A) Signup and view all the answers

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

To discourage consumption and raise revenue (D) Signup and view all the answers

What is the result of a price ceiling set below the market equilibrium price?

A shortage of goods and services (C) Signup and view all the answers

What is the primary purpose of government spending in the economy?

To allocate resources across various sectors (A) Signup and view all the answers

What is the primary difference between public goods and merit goods?

Public goods are non-excludable and non-rivalrous, while merit goods are excludable and rivalrous (C) Signup and view all the answers

What is the primary purpose of subsidies to consumers?

To make essential goods more affordable (A) Signup and view all the answers

What is the result of a price floor set above the market equilibrium price?

A surplus of goods and services (D) Signup and view all the answers

What is the primary purpose of regulation in the economy?

To address market failures, including monopolies and externalities (A) Signup and view all the answers

What is the primary purpose of taxation in the economy?

To fund public services and allocate resources across various sectors (B) Signup and view all the answers

What is the primary function of the exchange mechanism in a market?

To transfer goods or services from sellers to buyers at agreed prices (C) Signup and view all the answers

Which of the following is a characteristic of both consumer and factor markets?

The exchange of goods and services (C) Signup and view all the answers

What is the primary consequence of imperfect markets?

Inefficient allocation of resources (D) Signup and view all the answers

What is the primary role of prices in a market economy?

To allocate resources efficiently (B) Signup and view all the answers

What is the primary difference between perfect and imperfect markets?

The availability of full information (D) Signup and view all the answers

What is the primary consequence of a change in the quantity demanded?

A change in the price of the good or service (C) Signup and view all the answers

What is the primary role of sellers in a market?

To compete with other sellers to attract buyers (C) Signup and view all the answers

What is the primary implication of the law of demand?

That there is an inverse relationship between price and quantity demanded (B) Signup and view all the answers

What is the primary consequence of uneven income distribution in an economy?

Inefficient allocation of resources (D) Signup and view all the answers

What is the main goal of government interventions in markets?

To correct market failures and promote equitable distribution of resources (A) Signup and view all the answers

What is the consequence of high inflation rates on the economy?

Erosion of purchasing power and destabilization of the economy (D) Signup and view all the answers

What is the primary objective of environmental regulations?

To reduce pollution and prevent environmental damage (A) Signup and view all the answers

What is the result of inefficiencies in resource allocation?

Suboptimal position on the PPC curve (C) Signup and view all the answers

What is the primary role of government policies in addressing market failures?

To correct market failures and promote equitable distribution of resources (C) Signup and view all the answers

What is the primary goal of regulating monopolies?

To reduce prices and increase competition (C) Signup and view all the answers

What is the primary objective of income redistribution policies?

To reduce income disparities and promote equitable distribution of resources (A) Signup and view all the answers

What is the primary outcome of market forces adjusting supply and demand to maintain balance and efficiency?

Stable market prices (B) Signup and view all the answers

What is the primary reason for public sector intervention to address market failures?

To correct externalities and monopolies (A) Signup and view all the answers

What is the primary objective of implementing price controls in the economy?

To maintain fair pricing and economic equity (B) Signup and view all the answers

What is the primary function of government spending in the economy?

To allocate resources across various sectors (C) Signup and view all the answers

What is the primary purpose of providing subsidies to producers?

To support industries crucial for economic stability (D) Signup and view all the answers

What is the primary characteristic of public goods?

They are non-excludable and non-rivalrous (C) Signup and view all the answers

What is the primary outcome of a price floor set above the market equilibrium price?

Surpluses (C) Signup and view all the answers

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

To discourage consumption and raise revenue (C) Signup and view all the answers

What is the primary role of markets in regards to resource allocation?

To determine what goods and services are produced and consumed (B) Signup and view all the answers

What is the primary reason for government intervention in the economy?

To address market failures (A) Signup and view all the answers

What is the likely consequence of setting minimum wages too high?

Higher production costs (D) Signup and view all the answers

What is the primary objective of privatization?

To reduce public sector burdens (A) Signup and view all the answers

What is the implication of a convex PPC?

Decreasing opportunity costs (A) Signup and view all the answers

What is the primary purpose of social safety nets?

To support individuals who are unable to participate fully in the economy (B) Signup and view all the answers

What is the result of a leftward shift in the PPC?

Reduced resource availability (A) Signup and view all the answers

What is the primary role of the public sector in addressing market imperfections?

To correct market failures (A) Signup and view all the answers

What is the implication of a straight line PPC?

Constant opportunity costs (D) Signup and view all the answers

What is the primary objective of basic income grants?

To stimulate economic activity (C) Signup and view all the answers

What is the primary reason for government intervention in markets?

To correct market failures (A) Signup and view all the answers

What is the result of inefficiencies in resource allocation?

Surpluses and shortages (B) Signup and view all the answers

What is the primary mechanism by which prices allocate resources efficiently in a market economy?

Prices serve as signals that guide the decisions of producers and consumers. (A) Signup and view all the answers

Which of the following market structures is characterized by a single buyer or seller that influences the market price?

Monopoly (B) Signup and view all the answers

What is the primary implication of the Law of Supply?

An increase in price leads to an increase in the quantity supplied. (C) Signup and view all the answers

Which of the following is a characteristic shared by both consumer and factor markets?

The presence of sellers and buyers (A) Signup and view all the answers

What is the primary consequence of a change in the quantity supplied in a market?

A change in the market equilibrium price (D) Signup and view all the answers

What is the primary role of negotiation in a market?

To facilitate competition and price discovery (B) Signup and view all the answers

Which of the following is a characteristic of a perfect market?

The absence of barriers to entry and exit (C) Signup and view all the answers

What is the primary purpose of the exchange mechanism in a market?

To transfer goods and services from sellers to buyers at agreed prices (D) Signup and view all the answers

What is the primary function of markets in terms of resource allocation?

To allocate resources based on collective consumer preferences (D) Signup and view all the answers

What is the primary reason for public sector intervention in the economy?

To address market failures and redistribute income (C) Signup and view all the answers

What is the effect of a price ceiling set below the market equilibrium price?

A shortage of goods and services (A) Signup and view all the answers

What is the primary purpose of subsidies to producers?

To support industries crucial for economic stability (C) Signup and view all the answers

What is the primary difference between public goods and merit goods?

Public goods are non-excludable and non-rivalrous, while merit goods are excludable and rivalrous (C) Signup and view all the answers

What is the primary objective of government policies aimed at correcting market failures?

To increase the efficiency of resource allocation (D) Signup and view all the answers

What is the primary role of prices in a market economy?

To determine the quantity demanded and supplied (B) Signup and view all the answers

What is the primary consequence of uneven income distribution in an economy?

A decrease in the overall efficiency of resource allocation (B) Signup and view all the answers

What is the primary effect of minimum price levels on the economy?

It ensures producers receive a fair price and consumers can afford essential goods. (C) Signup and view all the answers

What is the primary purpose of government spending in the economy?

To provide public goods and services (C) Signup and view all the answers

What is the consequence of a price ceiling set below the equilibrium price?

A shortage of the good or service (C) Signup and view all the answers

What is the purpose of social safety nets in a welfare system?

To support individuals who are unable to participate fully in the economy (C) Signup and view all the answers

What is the primary function of the exchange mechanism in a market?

To facilitate the exchange of goods and services (D) Signup and view all the answers

What is the primary consequence of a monopoly in a market?

Higher prices and reduced output (A) Signup and view all the answers

What is the implication of a convex PPC?

Decreasing opportunity costs (A) Signup and view all the answers

What is the primary objective of state production of goods and services?

To maintain strategic control in vital sectors (D) Signup and view all the answers

What is the primary goal of government intervention in addressing income inequality?

To reduce income inequality through welfare programs and taxes (A) Signup and view all the answers

What is the effect of an outward shift in the PPC?

An increase in the production of goods and services (B) Signup and view all the answers

What is the primary consequence of pollution on the economy?

Harm to society's well-being (B) Signup and view all the answers

What do indifference curves represent?

Different combinations of two goods that provide the same level of satisfaction or utility (B) Signup and view all the answers

What is the primary role of antitrust laws in a market economy?

To prevent monopolistic practices and promote competition (D) Signup and view all the answers

What is the primary consequence of high inflation rates on the economy?

Eroded purchasing power (B) Signup and view all the answers

What is the primary challenge for governments in implementing public sector interventions?

Balancing interventions with the need for economic efficiency and growth (C) Signup and view all the answers

What is the primary objective of privatization?

To sell state-owned enterprises to private investors (D) Signup and view all the answers

What is the primary objective of government policies aimed at correcting market failures?

To move the economy towards the PPC (D) Signup and view all the answers

What is the primary consequence of inefficiencies in resource allocation?

Suboptimal position on the PPC (A) Signup and view all the answers

What is the primary consequence of market distortions?

Inefficiencies and surpluses or shortages (C) Signup and view all the answers

What is the primary role of the Production Possibility Curve (PPC) in economics?

To illustrate the trade-offs and choices facing economies due to scarce resources (B) Signup and view all the answers

What is the primary function of the exchange mechanism in a market?

To transfer goods or services from sellers to buyers at agreed prices (A) Signup and view all the answers

What is the key characteristic that distinguishes perfect markets from imperfect markets?

No barriers to entry and full information availability (A) Signup and view all the answers

What is the primary consequence of a change in the quantity demanded?

A change in the market equilibrium price (D) Signup and view all the answers

What is the primary role of sellers in a market?

To compete with other sellers for buyers (C) Signup and view all the answers

What is the primary implication of the law of demand?

There is an inverse relationship between price and the quantity demanded (C) Signup and view all the answers

What is the primary consequence of uneven income distribution in an economy?

A decrease in the overall welfare of society (B) Signup and view all the answers

What is the primary difference between consumer markets and factor markets?

Consumer markets deal with finished products, while factor markets deal with resources (D) Signup and view all the answers

What is the primary function of prices in a market economy?

To allocate resources efficiently (B) Signup and view all the answers

What is the primary function of market forces in achieving market equilibrium?

To allocate resources efficiently based on consumer preferences (B) Signup and view all the answers

What is the primary goal of public sector intervention in addressing market failures?

To promote social welfare and redistribute income (A) Signup and view all the answers

What is the primary effect of indirect taxes, such as Value-Added Tax (VAT)?

To increase the prices of goods and services (C) Signup and view all the answers

What is the primary difference between maximum and minimum prices?

Maximum prices are used to set a price ceiling, while minimum prices are used to set a price floor (C) Signup and view all the answers

What is the primary purpose of government spending in the economy?

To redistribute income and promote social welfare (D) Signup and view all the answers

What is the primary characteristic of public goods?

They are non-rivalrous and non-excludable (A) Signup and view all the answers

What is the primary consequence of a price ceiling set below the market equilibrium price?

A shortage of goods and services will result (A) Signup and view all the answers

What is the primary purpose of subsidies to producers?

To support industries crucial for economic stability (D) Signup and view all the answers

What is the primary consequence of imperfect markets?

Inefficient allocation of resources (B) Signup and view all the answers

What is the primary role of taxation in the economy?

To redistribute income and promote social welfare (C) Signup and view all the answers

What is the primary consequence of uneven income distribution in an economy?

Higher inflation rates (D) Signup and view all the answers

What is the primary objective of regulating monopolies in an economy?

To prevent monopolistic practices and promote competition (D) Signup and view all the answers

What is the primary effect of pollution on the economy?

Harm to society's well-being (D) Signup and view all the answers

What is the primary goal of government interventions in markets?

To correct market failures and promote efficient allocation of resources (C) Signup and view all the answers

What is the primary consequence of inefficiencies in resource allocation?

Suboptimal position on the PPC (A) Signup and view all the answers

What is the primary objective of income redistribution policies in an economy?

To reduce social and economic inequalities (C) Signup and view all the answers

What is the primary role of central banks in addressing inflation?

To adjust interest rates and use monetary tools to control inflation (D) Signup and view all the answers

What is the primary consequence of high inflation rates on the economy?

Erosion of purchasing power and destabilization of the economy (A) Signup and view all the answers

What is the primary motivation behind the public sector's provision of welfare to support individuals who are unable to participate fully in the economy?

To redistribute income and reduce poverty (A) Signup and view all the answers

What is the implication of a shift in the Production Possibility Curve (PPC) outward?

An increase in the resources available to the economy (A) Signup and view all the answers

What is the primary reason why governments engage in state production of goods and services?

To address market failures and provide public goods (B) Signup and view all the answers

What is the primary consequence of the implementation of minimum and maximum price levels in an economy?

Stabilization of the economy and protection of producers and consumers (B) Signup and view all the answers

What is the primary objective of basic income grants in a welfare system?

To provide a minimum income support to all citizens (C) Signup and view all the answers

What is the primary implication of a concave Production Possibility Curve (PPC)?

Increasing opportunity costs (C) Signup and view all the answers

What is the primary purpose of privatization of state-owned enterprises?

To increase the efficiency of the public sector and reduce public expenditure (D) Signup and view all the answers

What is the primary challenge for governments in implementing public sector interventions?

Balancing the need for economic efficiency and growth with the need to address market failures (D) Signup and view all the answers

What is the primary purpose of social safety nets in a welfare system?

To support individuals who are unable to participate fully in the economy (B) Signup and view all the answers

What is the primary implication of the implementation of price floors and ceilings?

Distortion of the natural balance of demand and supply, leading to inefficiencies (C) Signup and view all the answers

What is the primary consequence of a market failure due to pollution?

Destabilization of the economy and harm to society's well-being (C) Signup and view all the answers

What is the main goal of government policies aimed at addressing income redistribution?

To reduce social and economic inequalities (A) Signup and view all the answers

What is the primary effect of monopolies on the economy?

Reduction in competition and potentially higher prices (C) Signup and view all the answers

What is the primary consequence of inefficiencies in resource allocation?

The economy operates at a suboptimal point on the PPC (A) Signup and view all the answers

What is the primary objective of government interventions in markets?

To correct market failures and promote efficient resource allocation (D) Signup and view all the answers

What is the primary consequence of high inflation rates on the economy?

Erosion of purchasing power and destabilization of the economy (D) Signup and view all the answers

What is the primary role of central banks in addressing inflation?

To adjust interest rates and use monetary tools to control inflation (C) Signup and view all the answers

What is the primary objective of environmental regulations?

To prevent irreversible environmental damage (D) Signup and view all the answers

What is the primary reason why buyers and sellers negotiate in a market?

To ensure a mutually beneficial exchange (C) Signup and view all the answers

Which of the following is a characteristic of both consumer and factor markets?

The exchange of goods and services (C) Signup and view all the answers

What is the primary consequence of a price ceiling set below the market equilibrium price?

A shortage of the good or service (D) Signup and view all the answers

What is the primary role of the exchange mechanism in a market?

To facilitate the exchange of goods and services (C) Signup and view all the answers

What is the primary implication of the Law of Demand?

That there is an inverse relationship between price and quantity demanded (C) Signup and view all the answers

What is the primary difference between perfect and imperfect markets?

The level of information availability (A) Signup and view all the answers

What is the primary consequence of uneven income distribution in an economy?

Decreased economic growth (C) Signup and view all the answers

What is the primary role of prices in a market economy?

To allocate resources efficiently (D) Signup and view all the answers

What is the primary factor that determines the allocation of resources in a market economy?

Consumer preferences (A) Signup and view all the answers

Which of the following is a characteristic of market equilibrium?

Quantity demanded equals quantity supplied (C) Signup and view all the answers

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

To raise revenue for public services (C) Signup and view all the answers

Which of the following is a reason for public sector intervention in the economy?

To address market failures (D) Signup and view all the answers

What is the primary consequence of a price ceiling set below the market equilibrium price?

Shortages and black markets (A) Signup and view all the answers

What is the primary role of government spending in the economy?

To allocate resources across various sectors (C) Signup and view all the answers

What is the primary difference between public goods and merit goods?

Public goods are non-excludable and non-rivalrous, while merit goods provide significant societal benefits (B) Signup and view all the answers

What is the primary purpose of subsidies to consumers?

To make essential goods more affordable (A) Signup and view all the answers

What is the primary consequence of a price floor set above the market equilibrium price?

Surpluses and decreased demand (B) Signup and view all the answers

What is the primary role of regulation in the economy?

To ensure fair pricing and economic equity (C) Signup and view all the answers

What is the primary consequence of setting minimum and maximum price levels that are too extreme?

Distortion of the natural balance of demand and supply, leading to inefficiencies (A) Signup and view all the answers

What is the primary goal of providing basic income grants in a welfare system?

To alleviate poverty and stimulate economic activity (B) Signup and view all the answers

What is the primary reason for the state to engage in the production of goods and services?

To address market imperfections and provide public goods (C) Signup and view all the answers

What is the implication of a convex PPC?

Decreasing opportunity costs (B) Signup and view all the answers

What is the effect of an outward shift in the PPC?

Economic growth (B) Signup and view all the answers

What is the primary purpose of indifference curves in understanding consumer preferences?

To represent different combinations of two goods that provide the same level of satisfaction (D) Signup and view all the answers

Why might governments privatize state-owned enterprises?

To increase efficiency and reduce public sector burdens (C) Signup and view all the answers

What is the key challenge for governments in implementing public sector interventions?

Balancing interventions with the need for economic efficiency and growth (C) Signup and view all the answers

What is the primary objective of government interventions in markets?

To address market imperfections and provide public goods (B) Signup and view all the answers

What is the result of inefficiencies in resource allocation?

Surpluses and shortages (D) Signup and view all the answers

Which of the following statements about the characteristics of markets is true?

Competition and negotiation between buyers and sellers are essential for market functioning. (C) Signup and view all the answers

What is the primary difference between consumer markets and factor markets?

Consumer markets deal with goods and services, while factor markets deal with resources. (D) Signup and view all the answers

In a market economy, prices serve as signals to:

Allocate resources efficiently. (B) Signup and view all the answers

According to the Law of Supply, what is the relationship between price and quantity supplied?

There is a direct relationship between price and quantity supplied. (A) Signup and view all the answers

Which of the following is a characteristic of perfect markets?

Full information is available to all buyers and sellers. (D) Signup and view all the answers

What is the primary role of the exchange mechanism in a market?

To transfer goods or services from sellers to buyers. (C) Signup and view all the answers

Which of the following is NOT a characteristic of markets?

Markets are always perfect and efficient. (C) Signup and view all the answers

What is the primary consequence of a change in the quantity demanded?

A change in the price of the good or service. (B) Signup and view all the answers

Which of the following is a consequence of monopolies in a market?

Higher prices for consumers (C) Signup and view all the answers

What is the primary goal of income redistribution policies?

To reduce income disparities (A) Signup and view all the answers

What is the result of a suboptimal position on the PPC?

Inefficient allocation of resources (D) Signup and view all the answers

What is the primary role of government policies in addressing market failures?

To correct inefficiencies and promote equitable distribution of resources (C) Signup and view all the answers

What is the primary reason why governments set minimum and maximum price levels in an economy?

To stabilize the economy by ensuring producers receive a fair price and consumers can afford essential goods. (D) Signup and view all the answers

What is the consequence of pollution on the economy?

Harm to society's well-being (D) Signup and view all the answers

What is the primary objective of Basic Income Grants in a welfare system?

To provide a minimum income support to all citizens, aiming to alleviate poverty and stimulate economic activity. (B) Signup and view all the answers

What is the primary objective of regulating monopolies?

To prevent monopolistic practices and promote competition (D) Signup and view all the answers

What is the consequence of high inflation rates on the economy?

Eroded purchasing power and destabilization of the economy (D) Signup and view all the answers

What is the primary reason why governments engage in state production of goods and services?

To maintain strategic control in vital sectors like energy and transportation. (A) Signup and view all the answers

What is the primary role of indifference curves in understanding consumer preferences?

To represent the trade-offs between different goods and services (A) Signup and view all the answers

What is the implication of a concave Production Possibility Curve (PPC)?

Increasing opportunity costs. (B) Signup and view all the answers

What is the primary consequence of a change in the shape of the PPC?

A change in the economy's efficiency and trade-offs. (D) Signup and view all the answers

What is the primary purpose of indifference curves in understanding consumer preferences?

To show the different combinations of two goods that provide the same level of satisfaction or utility. (B) Signup and view all the answers

What is the primary consequence of privatizing state-owned enterprises?

Increased efficiency and reduced public sector burdens. (C) Signup and view all the answers

What is the primary challenge for governments in implementing public sector interventions?

Balancing interventions with the need for economic efficiency and growth. (B) Signup and view all the answers

What is the primary objective of public sector interventions in the economy?

To address market imperfections and redistribute income. (C) Signup and view all the answers

What is the primary consequence of unintended consequences of public sector interventions?

Market distortions and increased public expenditure. (C) Signup and view all the answers

What is the primary mechanism by which markets allocate resources?

Collective consumer preferences reflected through prices (B) Signup and view all the answers

What is the primary condition that must be met for market equilibrium to occur?

The quantity demanded equals the quantity supplied (B) Signup and view all the answers

What is the primary purpose of public sector intervention in addressing market failures?

To correct externalities and ensure fair pricing (C) Signup and view all the answers

What is the primary effect of a price ceiling set below the market equilibrium price?

A shortage of goods and services (A) Signup and view all the answers

What is the primary difference between direct and indirect taxes?

Direct taxes are paid directly to the government, while indirect taxes are paid through higher prices (D) Signup and view all the answers

What is the primary purpose of government spending in the economy?

To fund public goods and services (C) Signup and view all the answers

What is the primary characteristic of public goods?

They are non-excludable and non-rivalrous (A) Signup and view all the answers

What is the primary effect of a price floor set above the market equilibrium price?

A surplus of goods and services (B) Signup and view all the answers

What is the primary purpose of subsidies to producers?

To support industries crucial for economic stability (C) Signup and view all the answers

What is the primary consequence of imperfect markets?

Inefficient allocation of resources (D) Signup and view all the answers

June P2 Hard

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Questions and Answers

What is the primary function of prices in a market economy?

Which of the following is a characteristic of imperfect markets?

What is the relationship between price and quantity demanded according to the Law of Demand?

What is the primary difference between consumer markets and factor markets?

What is the definition of utility in the context of markets?

Which of the following is a characteristic of perfect markets?

What is the term for the system where buyers and sellers interact to trade goods and services?

According to the Law of Supply, what is the relationship between price and quantity supplied?

What is the primary objective of setting minimum and maximum price levels in an economy?

What is the likely effect of a price floor that is set too high?

What is the main purpose of social safety nets in a welfare system?

Why might a government engage in state production of goods and services?

What is the Production Possibility Curve (PPC) used to illustrate?

What is the implication of a concave PPC?

What would cause an outward shift in the PPC?

What do indifference curves represent?

Why might governments privatize state-owned enterprises?

What is the key challenge for governments in implementing public sector interventions?

What is the primary reason for government intervention in markets?

Which of the following is NOT a cause of market failures?

What is the primary objective of environmental regulations?

What is the result of inefficiencies in resource allocation?

What is the role of indifference curves in understanding consumer preferences?

What is the primary objective of government policies aimed at correcting market failures?

What is the effect of high inflation rates on the economy?

What is the primary tool used by central banks to control inflation?

What is the primary function of markets in regards to resource allocation?

Which of the following is NOT a reason for public sector intervention in the economy?

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

What is the result of a price ceiling set below the market equilibrium price?

What is the primary purpose of government spending in the economy?

What is the primary difference between public goods and merit goods?

What is the primary purpose of subsidies to consumers?

What is the result of a price floor set above the market equilibrium price?

What is the primary purpose of regulation in the economy?

What is the primary purpose of taxation in the economy?

What is the primary function of the exchange mechanism in a market?

Which of the following is a characteristic of both consumer and factor markets?

What is the primary consequence of imperfect markets?

What is the primary role of prices in a market economy?

What is the primary difference between perfect and imperfect markets?

What is the primary consequence of a change in the quantity demanded?

What is the primary role of sellers in a market?

What is the primary implication of the law of demand?

What is the primary consequence of uneven income distribution in an economy?

What is the main goal of government interventions in markets?

What is the consequence of high inflation rates on the economy?

What is the primary objective of environmental regulations?

What is the result of inefficiencies in resource allocation?

What is the primary role of government policies in addressing market failures?

What is the primary goal of regulating monopolies?

What is the primary objective of income redistribution policies?

What is the primary outcome of market forces adjusting supply and demand to maintain balance and efficiency?

What is the primary reason for public sector intervention to address market failures?

What is the primary objective of implementing price controls in the economy?

What is the primary function of government spending in the economy?

What is the primary purpose of providing subsidies to producers?

What is the primary characteristic of public goods?

What is the primary outcome of a price floor set above the market equilibrium price?

What is the primary purpose of indirect taxes, such as Value-Added Tax (VAT)?

What is the primary role of markets in regards to resource allocation?

What is the primary reason for government intervention in the economy?

What is the likely consequence of setting minimum wages too high?

What is the primary objective of privatization?

What is the implication of a convex PPC?

What is the primary purpose of social safety nets?

What is the result of a leftward shift in the PPC?

What is the primary role of the public sector in addressing market imperfections?

What is the implication of a straight line PPC?

What is the primary objective of basic income grants?

What is the primary reason for government intervention in markets?

What is the result of inefficiencies in resource allocation?

What is the primary mechanism by which prices allocate resources efficiently in a market economy?

Which of the following market structures is characterized by a single buyer or seller that influences the market price?

What is the primary implication of the Law of Supply?

Which of the following is a characteristic shared by both consumer and factor markets?