Day: July 12, 2025

Accounting Multiple Choice Question – 12 July 2025

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

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Government intervention in a market economy can lead to an increase in economic welfare if?

Select ONE answer:

  1. It sets a good’s maximum price above its equilibrium price
  2. The market mechanism has failed to allow for externalities
  3. It sets a good’s minimum price above its equilibrium price
  4. The demand for inferior goods rises as incomes increase

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

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not correct
  2. Correct == > Government intervention in a market economy can lead to an increase in economic welfare if the market mechanism has failed to allow for externalities. The government setting a minimum or maximum price above the equilibrium price would be ineffective. Demand for inferior goods falls as incomes rise.
  3. Not correct
  4. Not correct

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