Reasons for Government Intervention in Markets Quiz by Shubhrata Shrestha | May 24, 2025 | 0 comments Reasons for Government Intervention in Markets Quiz 1. Which of the following is a characteristic of a public good? A. It is sold for profit B. It is non-rivalrous C. It has high marginal cost D. It is only used by the government None 2. Why are demerit goods over-consumed in a free market? A. They are priced too high B. They have negative externalities C. They are public goods D. Their supply is restricted by the government None 3. Which government policy is most suitable to encourage consumption of merit goods? A. Indirect taxes B. Maximum pricing C. Subsidies D. Price floors None 4. Which is a likely result of imposing a maximum price below equilibrium? A. Surplus B. Black market C. Increase in production D. Lower demand None 5. The purpose of a minimum wage law is to: A. Reduce unemployment B. Encourage exports C. Ensure fair income for workers D. Lower business costs None 6. Public goods are not provided by private firms because: A. They have inelastic supply B. The market price is too high C. They cannot exclude non-payers D. They are illegal to sell None 7. A key reason for under-consumption of merit goods is: A. Government interference B. Consumers underestimate benefits C. They are too widely available D. High negative externalities None 8. Which of these is an example of a price floor? A. Rent control B. Minimum wage C. Interest rate cap D. Maximum petrol price None 9. Which of the following is NOT a government method of addressing market failure? A. Advertising bans B. Free provision C. Collusion with firms D. Indirect taxation None 10. The free rider problem is most associated with: A. Private goods B. Public goods C. Merit goods D. Subsidised goods None Time's up Submit a Comment Cancel replyYour email address will not be published. Required fields are marked *Comment * Name * Email * Website Save my name, email, and website in this browser for the next time I comment. Δ
