Pearson Edexcel International A Level · Economics (YEC11)

Government intervention in markets: Practice Questions

4 multiple-choice questions marked as you go, and 3 written questions with worked solutions. All on Government intervention in markets.

7 questions18 marksFree, no account
Question 1
1 mark

A government decides to switch from a specific tax of \(£5\) per unit to an ad valorem tax of 10% on a product. Which statement correctly describes the nature of an ad valorem tax?

Question 2
1 mark

A government reduces the total number of tradeable pollution permits available in a cap-and-trade scheme. What is the most likely consequence for the market of these permits and the environment?

Question 3
1 mark

A government imposes a specific tax of \(£2\) per unit on a product for which the demand curve is perfectly inelastic (\(PED = 0\)) and the supply curve is normally upward-sloping. How will the burden of this tax be distributed between consumers and producers?

Question 4
1 mark

Which of the following is the main economic argument for using tradable pollution permits (cap and trade) as opposed to fixed pollution quotas (command and control)?

Question 5
4 marks

Explain why the government might choose to use tradable pollution permits rather than direct regulation to control negative production externalities caused by carbon emissions.

Write your answer out first, then check it against the worked solution.

Question 6
5 marks

Explain the concept of 'regulatory capture' and outline why it represents a form of government failure when attempting to correct market failure.

Write your answer out first, then check it against the worked solution.

Question 7
5 marks

Evaluate the potential impact of imposing a binding maximum price (price ceiling) on essential rental housing, specifically focusing on the non-price consequences for consumers in the long run.

Write your answer out first, then check it against the worked solution.

* The content provided by thinka is generated by AI and may not always be accurate or up-to-date. Please use it as a supplementary resource and verify with official materials.

You've seen the model answer. Now get yours marked.

This page can show you how a good answer looks. It cannot tell you what your answer was missing. thinka marks your written work against the real mark scheme in about 15 seconds.

Get My Answers MarkedBack to the notes

Want more questions like these? Get a fresh set on this topic, graded as you go.

Practice More