DP Economics Questionbank

A government decides to impose an indirect tax on unhealthy drinks. Discuss the consequences for the stakeholders in these markets.

Discuss the view that governments should tax the consumption of gasoline (petroleum).

Using a demand and supply diagram, explain the effect of government subsidies on the US corn market (paragraph [5]).

Draw and label the new supply curve following the granting of the subsidy to domestic cotton producers on Figure 3.

Calculate the cost to the government of San Marcus of providing this subsidy to domestic cotton producers.

Calculate the change in the consumer surplus resulting from the subsidy.

Explain why a government might decide to impose a price ceiling on goods and services such as essential foods or rented housing.

Using a demand and supply diagram, explain why the increase in the minimum wage might affect Cambodia’s garment manufacturing competitiveness against other countries in the region (paragraph [4]).

Explain two reasons why a government might impose indirect taxes.

Explain why governments impose price floors in the market for agricultural products.

Explain why governments provide subsidies.

Using a demand and supply diagram, explain the impact on households of “removing some subsidies on food” (paragraph [5]).

Calculate the shortage resulting from the imposition of the maximum price.

Calculate the change in producer surplus resulting from the imposition of the maximum price.

Calculate the change in consumer expenditure on rice resulting from the imposition of the maximum price.

State two methods of non-price rationing.

Explain the impact on consumers, producers and the government of a price floor being introduced in an agricultural market.

Using a demand and supply diagram, explain how a subsidy changes the consumer surplus for a good (paragraph [6]).

Governments intervene in markets to support firms and to promote equity. Explain one policy that could be used to support firms and one policy that could be used to promote equity.

Using a demand and supply diagram, explain how the rise in the maximum price of maize would change the welfare loss associated with the maximum price (Text E, paragraph [2]).

Using Figure 2, calculate the revenue (in rupees per day) collected from the indirect taxes on petrol in New Delhi.