Markets: Applications of demand and supply - Question Bank

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Question Bank - Economics

Markets: Applications of demand and supply

Q1. Which of the following statements is true if the government places a price ceiling on petrol at €1.50 per litre and the equilibrium price is €1.00 per litre? (Select one answer) (a) A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint. (b) A significant increase in the supply of petrol could cause the price ceiling to become a binding constraint (c) There will be a shortage of petrol (d) There will be a surplus of petrol

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Q2. The burden of a tax falls more heavily on the sellers in a market when (Select one answer) (a) both supply and demand are elastic (b) both supply and demand are inelastic (c) demand is inelastic and supply is elastic (d) demand is elastic and supply is inelastic

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Q3. 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? (Select one answer) (a) A teenage worker with few qualifications (b) A manual worker with fifteen years of work experience (c) A professional worker with a university degree (d) All three are equally likely to find it difficult to get a job

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Q4. Which of the following is an example of a price floor? (Select one answer) (a) The minimum wage (b) Rent controls (c) Restricting petrol prices to €1.00 per litre when the equilibrium price is €1.50 per litre (d) All of these answers are price floors

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Q5. Which of the following takes place when a tax is placed a good? (Select one answer) (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 an increase in the quantity sold (c) a decrease in the price buyers pay, an increase in the price sellers receive, and an increase in the quantity sold (d) an increase in the price buyers pay, a decrease in the price sellers receive, and a decrease in the quantity sold

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