Microeconomics Quiz
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Questions and Answers

What potential problem arises from implementing taxes on negative externalities, such as tobacco tax?

  • Market inefficiency
  • Tax evasion (correct)
  • Increased consumption of negative externalities
  • Decreased government revenue

    • What could be a consequence of a surplus in supply causing a fall in price for entrepreneurs?

  • Increased consumer demand
  • Lower revenue (correct)
  • Expanded market share
  • Market equilibrium

    • Why might policies to reduce consumption of over-consumed resources prove politically unpopular?

  • Resistance from industries reliant on over-consumption (correct)
  • Lack of public awareness on over-consumption issues
  • Potential negative impact on economic growth
  • Inefficiency of policy implementation

    • What does the price mechanism fail to take into account in relation to environmental issues?

    <p>Future costs</p> Signup and view all the answers

    What potential problem could arise from implementing taxes on negative externalities, such as tobacco tax?

    <p>Tax evasion may occur, undermining the effectiveness of the tax</p> Signup and view all the answers

    Why might volatile markets cause swings in economic fortunes?

    <p>Impact on investment confidence</p> Signup and view all the answers

    What does the price mechanism fail to take into account in relation to environmental issues?

    <p>Future costs of over-consumption</p> Signup and view all the answers

    Why might policies to reduce consumption of over-consumed resources prove politically unpopular?

    <p>They may impose restrictions on individual freedom and choice</p> Signup and view all the answers

    Why might volatile markets cause swings in economic fortunes?

    <p>They can lead to unpredictable changes in revenue for entrepreneurs</p> Signup and view all the answers

    What could be a consequence of a surplus in supply causing a fall in price for entrepreneurs?

    <p>Lower revenue for entrepreneurs</p> Signup and view all the answers

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