Govt policies

Which of the following is not true?

• An indirect tax is levied on the producer

• GST is a direct tax

• Corporate tax is a direct tax

• A specific tax is an indirect tax

Which of the following is true?

• 
• Direct tax shifts the supply curve

• A specific tax shifts the demand curve

• GST is an ad valorem tax

Which of the following is incorrect?

• P2-P1 is the amount of tax paid by the consumer at Q2

• P3 is the new price paid by the consumer after the ad valorem tax is levied

• P3 is the final price received by the producer after the ad valorem tax is levied

Which of the following about subsidies is/are true?

• Edusave is a form of an indirect subsidy

• All subsidies are desirable

• Cuts in rental subsidies to retailers raises the cost of production

• CDC voucher is a form of a direct subsidy

How might the price ceiling become ineffective?

• Assuming a normal good, an increase in income causes demand to increase and eqm price to rise above P

• An unfavourable change in taste and preferences causes demand for the good and price to fall between P and Pmax

• A bumper harvest for wheat causes the SS of wheat to increase such that eqm price falls below Pmax

• Government monitoring and policing is a very strong deterrent against black marketeers

What is/are not reason(s) for a price ceiling?

• To ensure farmers receive a minimum level of income

• To ensure producers produce essential goods

• To ensure basic necessities remain affordable

• To allow producers to maximise profits

Which of the following is true about a price floor?

• It must be set above the market equilibrium price for it to be effective

• It causes a shortage

• Government may have to step in to buy up excess stocks

• It reduces incentives for producers to produce

A production quota is typically imposed...

• to ensure prices of essential goods remain affordable

• to help producers maximise profits

• to physically limit production

• to help alleviate shortages in the market

Using a demand and supply diagram, illustrate a case of a change in market demand or supply that reduces a surplus caused by a price floor/minimum price