Economics Government Intervention Quiz

What are the characteristics of public goods?

• Excludable and rival

• Non-excludable and non-rival

• Excludable and non-rival

• Non-excludable and rival

What are the characteristics of demerit goods?

• Undervalued and under-consumed

• Non-excludable and non-rival

• Over-valued and over-consumed

• Excludable and rival

Why are merit goods provided by the government?

• To discourage consumption

• To raise revenue

• To increase economic efficiency

• To encourage consumption

What is a free rider in the context of public goods?

• Someone who consumes the product without paying for it

• Someone who produces the public good for free

• Someone who rejects the public good

• Someone who overvalues the public good

What is the purpose of setting a maximum price control?

• To stabilize the price

• To increase the income of producers

• To make it more affordable for the poor

• To discourage consumption

What is the main characteristic of a merit good?

• Non-excludable and non-rival

• Undervalued and under-consumed

• Excludable and rival

• Over-valued and over-consumed

What is the purpose of a government subsidy?

• To encourage consumption

• To raise revenue

• To discourage consumption

• To stabilize the price

What is the main disadvantage of a minimum price control?

• Stabilizes the price

• Creates a surplus

• Makes it less accessible to the poor

• Encourages over-consumption

What is the purpose of government regulation?

• To influence people's behavior

• To stabilize the price

• To raise revenue

• To discourage consumption

What is the potential downside of government intervention?

• Increase economic efficiency

• May have unexpected effects

• Easy to enforce

• Motivated by political popularity