IB Economics Practice Questions

This is Price ceiling graph to answer no. 1-10.

What is the main purpose of a price ceiling?

• To protect producers from low prices

• To protect consumers from high prices

• To increase government revenue

• To reduce unemployment

If a price ceiling is set below equilibrium, what occurs?

• Surplus

• Shortage

• No effect

• Price remains unchanged

In the diagram, the equilibrium price is approximately:

• P = 30

• P = 40

• P = 50

• P = 70

A shortage occurs because:

• Quantity supplied exceeds quantity demanded

• Quantity demanded exceeds quantity supplied

• Producers raise prices

• Government buys excess stock

Which group loses the most when a price ceiling is imposed?

• Producers

• Consumers who buy at lower prices

• Government

• Exporters

Which group benefits most from a price ceiling?

• All consumers equally

• Only consumers able to purchase at lower price

• Producers who sell more

• Government

What type of inefficiency is created by a price ceiling?

• Allocative inefficiency

• Productive inefficiency

• Externalities

• Monopoly power

If the government wants to remove the shortage, which policy could help?

• Increase supply through subsidies

• Increase demand through tax cuts

• Raise the price ceiling

• Reduce imports

Which of the following is a real-world example of a price ceiling?

• Minimum wage in labor markets

• Rent controls in major cities

• Agricultural price support schemes

• Tariffs on imports

What happens to consumer surplus under a binding price ceiling?

• It increases for all consumers

• It decreases for all consumers

• It increases for some, decreases for others

• It remains the same