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prices wages taxes MCQs

Practise focused prices wages taxes questions with marked answers for exam preparation and subject revision.

prices wages taxes Mcqs

1. Which side of the market is more likely to lobby government for a price floor ?
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A. the buyers

B. Neither buyers nor sellers desire a price floor.

C. the sellers

D. Both buyers and sellers desire a price floor.

2. Which of the following statements about a binding price ceiling is true ?
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A. The surplus created by the price ceiling is greater in the short run than in the long run

B. The shortage created by the price ceiling is greater in the short ran than in the long run.

C. The shortage created by the price ceiling is greater in the long run than in the short run

D. The surplus created by the price ceiling is greater in the long run than in the short run

3. A tax placed on a good that is a necessity for consumers will likely generate a tax burden that ?
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A. falls more heavily on buyers.

B. falls entirely on sellers

C. is evenly distributed between buyers and sellers.

D. falls more heavily on sellers

4. 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 ?
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A. There will be surplus of petrol

B. A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.

C. There will be a shortage of petrol

D. A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.

5. A price floor ?
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A. sets a legal minimum on the price at which a good can be sold

B. always determines the price at which a good must be sold

C. is not a binding constraint if it is set above the equilibrium price

D. sets a legal maximum on the price at which a good can be sold

6. Which of the following statements about the burden of a tax is correct ?
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A. 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 unfavorable to them.

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 generated from a tax placed on a good consumer perceive to be a necessity will fall most heavily on the sellers of the good

7. The burden of a tax falls more heavily on the sellers in a market when ?
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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

8. Which of the following takes place when a tax is placed a good ?
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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 a decrease in the quantity sold

C. an increase in the price buyers pay a decrease in the price sellers receive, and an increase in the quantity sold

D. a decrease in the price buyers pay, an increase in the price sellers receive and an increase in the quantity sold

9. When a tax is collected from the buyers in a market, ?
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A. the buyers bear the burden of the tax

B. the tax burden falls most heavily on the buyers.

C. the tax burden on the buyers and sellers in the same as an equivalent tax collected from the sellers

D. the sellers bear the burden of the tax

10. Suppose the equilibrium price for apartments is Rs500 per month and the government imposes rent controls of Rs250 Which of the following is unlikely to to occur as a result of the rent controls?
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A. Landlords may be offered bribes to rent apartments

B. Landlords may discriminate among apartment renters

C. There may be long lines of buyers waiting for apartments

D. the quality of apartments will improve

E. there will be a storage of housing

11. 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?
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A. All there are equally likely to find it difficult to get a job

B. A manual worker with fifteen years of work experience

C. A professional worker with university degree.

D. a teenage worker with few qualifications.

12. For which of the following products would the burden of a tax likely fall more heavily on the sellers ?
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A. entertainment

B. food

C. housing

D. Clothing

13. Within the supply and demand model, a tax collected from the sellers of a good shift the ?
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A. demand 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. supply curve downward by the size of the tax per unit

14. The burden of a tax falls more heavily on the buyers in a market when ?
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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

15. The surplus caused by a binding price floor will be greatest if ?
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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

16. Which of the following is an example of price floor ?
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A. restricting petrol prices to Rs100 per litre when the equilibrium price is Rs150 per litre

B. rent controls

C. All of these answers are price floors

D. the minimum wage

17. Within the supply and demand model, a tax collected from the buyers of a good shifts the ?
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A. demand curve upward by the size of the tax per unit.

B. Supply curve upward by the size of the tax per unit

C. demand curve downward by the size of the tax per unit

D. supply curve downward by the size of the tax per unit.

18. For a price ceiling to be binding constraint on the market the government must set it ?
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A. above the equilibrium price

B. precisely at the equilibrium price

C. below the equilibrium price

D. at any price because all price ceilings are binding constraints

19. A binding price ceiling creates?
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A. a surplus

B. an equilibrium

C. a shortage or a surplus depending on whether the price ceiling is set above or below the equilibrium price

D. a shortage

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