Economics 0455: The allocation of resources: how the market works; market failure Topical Past Paper Questions

Which demerit good is likely to have the largest level of overconsumption? A a demerit good that is subsidised by the government B a demerit good that is taxed by the government C a demerit good with an effective minimum price D a demerit good with no government intervention

The diagram shows the equilibrium price for bread. What will be the short-term effect if the government sets a maximum price below $5? A a shift in the demand curve B a shift in the supply curve C an excess of demand over supply D an excess of supply over demand

What is an external cost of smoking cigarettes? A the cost of the cigarette packaging B the cost to non-smokers' health C the cost to smokers D the tax on cigarettes