Economics Multiple Choice Question – 25 July 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Economics

The table below shows the market for a product before the imposition of an indirect tax.

Table 64

What would be the change in the equilibrium price if a tax of £4 was imposed?

Select ONE answer:

  1. £1
  2. £2
  3. £3
  4. £4

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 1

  1. Correct: The initial equilibrium price is £16. When an indirect tax of £4 is imposed, the firms would receive the sale price minus the tax. So now at £20, they will supply what they previously supplied at £16. This will create a new supply curve. The new equilibrium price is now £17, a rise of £1. Consumers are bearing £1 of the tax and the firms £3.
  2. Incorrect
  3. Incorrect
  4. Incorrect

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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