Government Intervention in Price Mechanism
Economics ⇒ Government and the Economy
Government Intervention in Price Mechanism starts at 10 and continues till grade 12.
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Describe how a subsidy affects the supply curve of a product.
Describe one disadvantage of government intervention in the price mechanism.
Describe one way in which government intervention can promote social welfare.
Describe the impact of a price floor on the agricultural sector in India.
Explain how government intervention can help in reducing income inequality.
Explain how government intervention can lead to market distortions.
Explain the difference between a price ceiling and a price floor.
The government sets a price ceiling on onions at Rs. 30 per kg, while the equilibrium price is Rs. 40 per kg. What is the likely outcome in the market?
The government provides a subsidy of Rs. 10 per unit to producers. If the original supply curve is S, what happens to the new supply curve? (1) Shifts left (2) Shifts right (3) No change (4) Becomes vertical
The government sets a minimum price for sugarcane above the equilibrium price. What is the likely result? (1) Shortage (2) Surplus (3) Equilibrium (4) Decrease in supply
Which of the following is a direct effect of a price ceiling? (1) Surplus (2) Shortage (3) Increase in supply (4) Decrease in demand
Which of the following is a likely consequence of a price ceiling on rent in urban areas? (1) Increase in available housing (2) Shortage of rental housing (3) Decrease in demand for housing (4) Surplus of rental housing
A price ceiling is set ______ the equilibrium price.
Fill in the blank: A ______ is a government payment to producers to encourage production or consumption of a good.
Fill in the blank: Government intervention is often justified to correct ______ failures.
Fill in the blank: The government may intervene in the market to control ______, which is a general rise in prices.
True or False: A price floor leads to excess supply if set above the equilibrium price.
True or False: Government intervention is always necessary for the efficient functioning of markets.
True or False: Price controls always lead to efficient allocation of resources.
True or False: Price controls can sometimes lead to the emergence of black markets.
