Tag: Tax

Anti-monopoly legislation is an example of government intervention to address market failure caused by?

Select ONE answer:

1. Market imperfection
2. Externality
3. Asymmetric information
4. Inequity

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 1

1. Correct == > Monopoly is the antithesis of perfect competition and is, therefore, a market imperfection.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The Staffie product is manufactured in the UK but is also imported into the UK from Belgium.

The UK government has recently decided to apply an import quota on imports of the product from Belgium at a level below the current level of imports.

This action will have the effect of?

Select ONE answer:

1. Only Belgium suppliers suffering a lower price
2. Both UK and Belgium suppliers suffering a lower price
3. Only UK suppliers enjoying a higher price
4. Both UK and Belgium suppliers enjoying a higher price

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > Restricting supply (via quota) will cause the price to rise.

This work is licensed under a Creative Commons Attribution 4.0 International License.

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

This work is licensed under a Creative Commons Attribution 4.0 International License.

Big Brum plc has been charged under the Competition Act 1998 with entering into an illegal anti-competitive agreement with one of its closest competitors, called Nasty Notts plc.

The company will be charged with breaching?

Select ONE answer:

1. Chapter 1 of the Competition Act 1998
2. Chapter 2 of the Competition Act 1998
3. Chapter 3 of the Competition Act 1998
4. Chapter 4 of the Competition Act 1998

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 1

1. Correct == > Chapter 1 of the Competition Act 1998 specifically deals with anti-competitive agreements.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The government is considering placing an additional tax on cigarettes to raise revenue to finance healthcare benefits.

The demand for cigarettes is price inelastic.

Which of the following statements is true?

Select ONE answer:

1. The tax on cigarettes may not raise as much revenue as anticipated in the years to come because the demand for cigarettes is likely to become more elastic over time
2. This tax will not raise much revenue either in the short term or the long term since demand is price inelastic
3. No tax revenue can be raised in this way because sellers of cigarettes will just lower their price by the amount of the tax and, therefore, the price of cigarettes to consumers will not change
4. This is a very good way to raise revenue, both in the short term and in the long term, because there are no substitutes for cigarettes

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 1

1. Correct == > The tax on cigarettes may not raise as much revenue as anticipated in the years to come because the demand for cigarettes is likely to become more elastic over time. Price elasticity nearly always increases over time and will reduce the tax revenue. People can change their behaviour given enough time.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.