Methods and effects of government intervention in markets
3.2What the syllabus asks of you
- impact and incidence of specific indirect taxes
- impact and incidence of subsidies
- direct provision of goods and services
- maximum and minimum prices
- buffer stock schemes
- provision of information
Drill this topic
Every question on Methods and effects of government intervention in markets, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
83 questions
1May / June 2026 · Paper 11 · Q13Show mark scheme →
AP1HIP2
BP1JKP2
CP2IGP3
DP2KLP3
Mark scheme
2May / June 2026 · Paper 12 · Q11Show mark scheme →
Aa government grant to a firm to provide healthcare services
Ba government regulation on the amount of sugar in soft drinks
Ca government subsidy to a firm that operates a regional train service
Da government takeover of a local bus service
Mark scheme
3May / June 2026 · Paper 12 · Q13Show mark scheme →
A$200
B$400
C$800
D$1200
Mark scheme
4May / June 2026 · Paper 13 · Q15Show mark scheme →
Acompanies will produce more new vaccines to meet the demand at the maximum price
Bdemand of the new vaccine will decrease at the maximum price
Csome consumers will be unable to buy the new vaccine at the maximum price
Dthe market will clear at the maximum price
Mark scheme
5May / June 2026 · Paper 14 · Q11Show mark scheme →
Aconsumer expenditures
Bgovernment expenditures
Cprice of the product
Dproducer revenues
Mark scheme
6Oct / Nov 2025 · Paper 11 · Q10Show mark scheme →
AThe government introduces a subsidy on renewable fuels to help the environment.
BThe government introduces a unit tax on cigarettes to discourage consumption.
CThe government sets a maximum rent on housing to protect tenants.
DThe government takes over a private library to improve local services.
Mark scheme
7Oct / Nov 2025 · Paper 11 · Q12Show mark scheme →
Aa shift to the left in the demand curve and a rise in equilibrium quantity
Ba shift to the left in the supply curve and a rise in equilibrium quantity
Ca shift to the right in the demand curve and a fall in equilibrium price
Da shift to the right in the supply curve and a fall in equilibrium price
Mark scheme
8Oct / Nov 2025 · Paper 11 · Q14Show mark scheme →
Ato benefit poorer consumers
Bto encourage consumption of a merit good
Cto encourage production of a public good
Dto support the incomes of producers
Mark scheme
9Oct / Nov 2025 · Paper 12 · Q10Show mark scheme →
Aeasy to produce: yes; cheap to store: yes; perishable: yes
Beasy to produce: yes; cheap to store: no; perishable: no
Ceasy to produce: no; cheap to store: yes; perishable: no
Deasy to produce: no; cheap to store: no; perishable: yes
Mark scheme
10Oct / Nov 2025 · Paper 12 · Q12Show mark scheme →
A
B
C
D
Mark scheme
11Oct / Nov 2025 · Paper 13 · Q13Show mark scheme →
Aconsumer expenditures
Bprice of the product
Cproducers’ revenues
Dtax receipts
Mark scheme
12Oct / Nov 2025 · Paper 13 · Q16Show mark scheme →
Ademerit good — to decrease consumption
Bdemerit good — to increase consumption
Cmerit good — to decrease consumption
Dmerit good — to increase consumption
Mark scheme
13Oct / Nov 2025 · Paper 14 · Q12Show mark scheme →
AThe tax falls entirely on the consumer.
BThe tax falls entirely on the producer.
CThe tax falls to a greater extent on the consumer than on the producer.
DThe tax falls to a smaller extent on the consumer than on the producer.
Mark scheme
14Oct / Nov 2025 · Paper 14 · Q13Show mark scheme →
Aa charity hospital funded by public donations that offers free treatment to the rural poor
Ba mobile government library that travels to rural villages offering access to books
Ca private-sector pharmacy that provides treatment directly to the public
Da private school that offers free places to children of low income families
Mark scheme
15Oct / Nov 2025 · Paper 14 · Q15Show mark scheme →
AThey are paid to firms.
BThey have to be paid back.
CThey reduce the cost of production.
DThey shift the supply curve to the right.
Mark scheme
16Oct / Nov 2025 · Paper 31 · Q8Show mark scheme →
ADiagram A
BDiagram B
CDiagram C
DDiagram D
Mark scheme
17Oct / Nov 2025 · Paper 33 · Q11Show mark scheme →
AThe long-run supply of rental houses will contract.
BThe number of unoccupied privately rented houses will increase over time.
CThe price of owner-occupied houses will increase.
DThere will be no effect on the supply of rental housing.
Mark scheme
18May / June 2025 · Paper 11 · Q12Show mark scheme →
AConsumers switch to cheaper brands of soft drink with a high sugar content.
BConsumers switch to other high-sugar substitute goods, such as alcohol or sweets.
CThe price elasticity of demand for soft drinks is inelastic.
DThe tax revenue is spent on education about the dangers of soft drink consumption.
Mark scheme
19May / June 2025 · Paper 11 · Q13Show mark scheme →
Amaximum, shortage, minimum, surplus
Bmaximum, surplus, minimum, shortage
Cminimum, shortage, maximum, surplus
Dminimum, surplus, maximum, shortage
Mark scheme
20May / June 2025 · Paper 11 · Q14Show mark scheme →
Aa maximum price of OP3 per test
Ba minimum price of OP2 per test
Ca subsidy paid to opticians of P3-P2 per test
Da subsidy paid to opticians of P3-P1 per test
Mark scheme
21May / June 2025 · Paper 12 · Q11Show mark scheme →
Aprice elasticity of demand is elastic
Bprice elasticity of demand is inelastic
Cprice elasticity of supply is elastic
Dprice elasticity of supply is inelastic
Mark scheme
22May / June 2025 · Paper 13 · Q12Show mark scheme →
AWith an effective maximum price for a product, a shortage will develop.
BWith an effective maximum price for a product, the market price will rise.
CWith an effective minimum price for a product, rationing will be necessary.
DWith an effective minimum price for a product, the market price will fall.
Mark scheme
23May / June 2025 · Paper 13 · Q14Show mark scheme →
Aability of new farmers to start growing good X: easy; cost of storing good X: high; global demand for good X: constant
Bability of new farmers to start growing good X: easy; cost of storing good X: low; global demand for good X: rising
Cability of new farmers to start growing good X: difficult; cost of storing good X: high; global demand for good X: constant
Dability of new farmers to start growing good X: difficult; cost of storing good X: low; global demand for good X: rising
Mark scheme
24Feb / March 2025 · Paper 12 · Q12Show mark scheme →
Aan indirect tax
Ba subsidy
Cdirect provision
Dprovision of information
Mark scheme
25Feb / March 2025 · Paper 12 · Q13Show mark scheme →
Abuy an amount equal to GH
Bbuy an amount equal to KJ
Cbuy an amount equal to LJ
Ddo nothing as the equilibrium price is below P1
Mark scheme
26Feb / March 2025 · Paper 32 · Q11Show mark scheme →
Aa specific tax instead of an ad valorem tax was introduced
Bfewer drinks than originally forecast contained sugar
Cmost retailers did not increase the price of soft drinks
Dthe demand for soft drinks was price inelastic
Mark scheme
27Oct / Nov 2024 · Paper 11 · Q12Show mark scheme →
Aincreasing road maintenance because of poor weather conditions
Bmaking payments to low-income families with elderly dependents
Csubsidising firms in order to encourage them to increase their output
Dtaxing firms because they have been emitting damaging fumes
Mark scheme
28Oct / Nov 2024 · Paper 11 · Q13Show mark scheme →
AThe burden of this tax will fall entirely on consumers.
BThe burden of this tax will fall entirely on suppliers.
CThe burden of this tax will fall mainly on consumers.
DThe burden of this tax will fall mainly on suppliers.
Mark scheme
29Oct / Nov 2024 · Paper 12 · Q12Show mark scheme →
AWZ
BXY
CXZ
DYZ
Mark scheme
30Oct / Nov 2024 · Paper 31 · Q12Show mark scheme →
ADeadweight loss decreases.
BPrivate marginal costs increase.
CPrivate marginal benefit decreases.
DSocial marginal costs decrease.
Mark scheme
31May / June 2024 · Paper 11 · Q13Show mark scheme →
Aa maximum price below the market price for food
Ba minimum price below the market price for food
Ca payment of a subsidy to farmers to produce food
Da release of government food stocks onto the market
Mark scheme
32May / June 2024 · Paper 13 · Q12Show mark scheme →
Ato discourage consumption of a demerit good.
Bto increase the consumption of a merit good.
Cto reduce the price of a private good.
Dto support the incomes of producers.
Mark scheme
33May / June 2024 · Paper 13 · Q13Show mark scheme →
AP1ZYP2
BP1ZWPe
CPeWYP2
DPeXZP1
Mark scheme
34Oct / Nov 2023 · Paper 12 · Q16Show mark scheme →
AThe demand curve of the good will shift vertically downwards by $1.
BThe demand curve of the good will shift vertically upwards by $1.
CThe supply curve of the good will shift vertically downwards by $1.
DThe supply curve of the good will shift vertically upwards by $1.
Mark scheme
35Oct / Nov 2023 · Paper 31 · Q16Show mark scheme →
Anegative | <1
Bnegative | >1
Cpositive | <1
Dpositive | >1
Mark scheme
36Oct / Nov 2023 · Paper 33 · Q15Show mark scheme →
Aaccelerating general inflation
Ban increase in profits above normal profits
Can increase in the stocks of unsold goods held by firms
Dshortages of the good
Mark scheme
37May / June 2023 · Paper 11 · Q12Show mark scheme →
AUT
BWT
CWU
DWX
Mark scheme
38May / June 2023 · Paper 11 · Q14Show mark scheme →
AConsumers would have to be rationed to quantity OQ1.
BThe government would have to introduce a subsidy of PP1.
CThe market equilibrium quantity OQ would be demanded and supplied.
DThe supply of quantity OQ2 would be guaranteed.
Mark scheme
39May / June 2023 · Paper 12 · Q10Show mark scheme →
AORWY
BPQUT
CPRWT
DQRWU
Mark scheme
40May / June 2023 · Paper 12 · Q16Show mark scheme →
Asetting an effective maximum price on the product and paying producers a subsidy
Bsetting an effective maximum price on the product and imposing an indirect tax on producers
Csetting an effective minimum price on the product and paying producers a subsidy
Dsetting an effective minimum price on the product and imposing an indirect tax on producers
Mark scheme
41May / June 2023 · Paper 13 · Q15Show mark scheme →
A$100
B$200
C$300
D$500
Mark scheme
42May / June 2023 · Paper 32 · Q17Show mark scheme →
AIt will encourage electricity suppliers to invest in additional capacity.
BIt will increase the incentive for consumers to conserve energy.
CIt will prevent the monopolistic exploitation of consumers.
DIt will prevent the rationing of electricity through power cuts.
Mark scheme
43Oct / Nov 2022 · Paper 11 · Q16Show mark scheme →
AP_aUZP_b
BP_aWYP_b
CP_eXYP_b
DVWYZ
Mark scheme
44Oct / Nov 2022 · Paper 11 · Q17Show mark scheme →
Aminimum ticket price ($) 11; price elasticity of demand for tickets inelastic
Bminimum ticket price ($) 11; price elasticity of demand for tickets elastic
Cminimum ticket price ($) 12; price elasticity of demand for tickets inelastic
Dminimum ticket price ($) 12; price elasticity of demand for tickets elastic
Mark scheme
45Oct / Nov 2022 · Paper 12 · Q15Show mark scheme →
AConsumption will fall if the maximum price is above the current equilibrium price.
BConsumption will rise if the maximum price is below the current equilibrium price.
CProduction will fall if the maximum price is above the current equilibrium price.
DProduction will fall if the maximum price is below the current equilibrium price.
Mark scheme
46Oct / Nov 2022 · Paper 12 · Q16Show mark scheme →
A$40
B$160
C$200
D$320
Mark scheme
47Oct / Nov 2022 · Paper 13 · Q18Show mark scheme →
Athe proportion of the tax paid by the consumer relative to the producer
Bthe reduction in output as a result of the imposition of the tax
Cthe revenue the tax generates for the government
Dthe increase in the hidden economy as a result of tax evasion after the tax is imposed
Mark scheme
48Oct / Nov 2022 · Paper 13 · Q19Show mark scheme →
ABoth the maximum and the minimum price will be effective.
BOnly the maximum price will be effective.
COnly the minimum price will be effective.
DThe market price will continue to operate.
Mark scheme
49May / June 2022 · Paper 11 · Q14Show mark scheme →
Aexcess demand | no effect | no effect
Bexcess supply | no effect | no effect
Cno effect | excess demand | excess supply
Dno effect | excess supply | excess demand
Mark scheme
50May / June 2022 · Paper 11 · Q17Show mark scheme →
AIt will encourage producers to build more power stations in the future.
BIt will encourage the development of renewable sources of electricity.
CIt will increase producer surplus.
DIt will increase the probability of power cuts.
Mark scheme
51May / June 2022 · Paper 12 · Q15Show mark scheme →
Aeffective maximum price; excess demand
Beffective maximum price; excess supply
Ceffective minimum price; excess demand
Deffective minimum price; excess supply
Mark scheme
52May / June 2022 · Paper 13 · Q14Show mark scheme →
Athe cost to the government of a subsidy to rice growers
Bthe extra saving to importers of the removal of a tariff on rice
Cthe increase in consumer surplus from the introduction of a maximum price for rice
Dthe loss in government revenue from the reduction in a lump sum tax on rice
Mark scheme
53May / June 2022 · Paper 13 · Q17Show mark scheme →
ASome consumers will be unable to buy face masks at the maximum price.
BFirms will produce more masks to meet the excess demand at the maximum price.
CPoorer consumers will be able to obtain all the masks they need at the maximum price.
DThe market will clear at the maximum price.
Mark scheme
54May / June 2022 · Paper 13 · Q18Show mark scheme →
Aa grant given to cover losses in an essential industry, such as the rail industry
Ba guaranteed minimum price paid to farmers to ensure the long run supply of food
Cfinancial assistance given to a pharmaceutical company to develop a new vaccine
Da payment made to the unemployed to allow them to buy essential goods and services
Mark scheme
55May / June 2022 · Paper 14 · Q15Show mark scheme →
AThere will be an increase in consumer sovereignty.
BOnly the private sector can provide merit goods.
CTax rates and tax income are likely to fall.
DInvestment in the private sector might be reduced.
Mark scheme
56May / June 2022 · Paper 14 · Q16Show mark scheme →
AThe equilibrium price of the good will fall by a larger percentage than the fall in equilibrium quantity.
BThe equilibrium price of the good will fall by a larger percentage than the rise in equilibrium quantity.
CThe equilibrium price of the good will fall by a smaller percentage than the fall in equilibrium quantity.
DThe equilibrium price of the good will fall by a smaller percentage than the rise in equilibrium quantity.
Mark scheme
57May / June 2022 · Paper 14 · Q17Show mark scheme →
Athe excess supply of the product
Bthe market price of the product
Cthe quantity of the product supplied
Dthe size of the consumer surplus
Mark scheme
58May / June 2022 · Paper 31 · Q10Show mark scheme →
Awhen fixed costs are very high
Bwhen the demand for the product is very high but unit costs are low
Cwhen the industry faces large natural barriers to entry
Dwhen the minimum efficient scale of production is above the level of demand at current prices
Mark scheme
59May / June 2022 · Paper 33 · Q10Show mark scheme →
Awhen fixed costs are very high
Bwhen the demand for the product is very high but unit costs are low
Cwhen the industry faces large natural barriers to entry
Dwhen the minimum efficient scale of production is above the level of demand at current prices
Mark scheme
60Feb / March 2022 · Paper 12 · Q15Show mark scheme →
Ademand falls, supply falls
Bdemand falls, supply rises
Cdemand rises, supply falls
Ddemand rises, supply rises
Mark scheme
61Feb / March 2022 · Paper 12 · Q18Show mark scheme →
Aquantity of journeys: 950, bus fare ($): 3
Bquantity of journeys: 950, bus fare ($): 7
Cquantity of journeys: 1050, bus fare ($): 4
Dquantity of journeys: 1050, bus fare ($): 6
Mark scheme
62Feb / March 2022 · Paper 32 · Q10Show mark scheme →
AThe firm continues to produce OT, and price remains at OW.
BThe firm continues to produce OT, but charges a lower price.
CThe firm increases production above OT, and reduces price.
DThe firm reduces production below OT, and reduces price by the amount of the subsidy.
Mark scheme
63Feb / March 2022 · Paper 32 · Q13Show mark scheme →
AImpose an indirect tax on the production of hydroelectric power.
BIncrease income tax.
CRemove any restrictions on coal production.
DSubsidise wind-powered electricity production.
Mark scheme
64Oct / Nov 2021 · Paper 11 · Q12Show mark scheme →
AMost of the incidence of the tax will fall on the producer.
BThere will be a new demand curve parallel to DD.
CThe price will rise by the full amount of the tax.
DThe quantity bought will fall proportionately to the tax rate.
Mark scheme
65Oct / Nov 2021 · Paper 11 · Q17Show mark scheme →
AInflation would rise.
BThe price of foodstuffs would rise.
CThere would be a decrease in the import of foodstuffs.
DThere would be a shortage of foodstuffs.
Mark scheme
66Oct / Nov 2021 · Paper 11 · Q18Show mark scheme →
ABuying the surplus would be costly to the government.
BBuying the surplus would decrease the incomes of producers.
CBuying the surplus would lead to a shortage.
DBuying the surplus would lead to unemployment.
Mark scheme
67Oct / Nov 2021 · Paper 12 · Q7Show mark scheme →
AJKX
BTKLS
CTKMR
DUJXS
Mark scheme
68Oct / Nov 2021 · Paper 12 · Q17Show mark scheme →
AIt will decrease from Q1 to Q2.
BIt will decrease from Q4Q1 to Q2Q3.
CIt will increase from Q3 to Q4.
DIt will increase from Q3Q2 to Q4Q1.
Mark scheme
69Oct / Nov 2021 · Paper 13 · Q17Show mark scheme →
AOP2JQ2
BOP3FQ1
CP3FJP2
DP2P4IJ
Mark scheme
70Oct / Nov 2021 · Paper 13 · Q18Show mark scheme →
Afix maximum price above market price
Bfix maximum price below market price
Cfix minimum price above market price
Dfix minimum price below market price
Mark scheme
71Oct / Nov 2021 · Paper 32 · Q15Show mark scheme →
Awhen it encourages domestic steel producers to achieve economies of scale
Bwhen it prevents dumping of low-grade steel
Cwhen it protects jobs of highly productive steel workers
Dwhen it reduces competition for steel workers
Mark scheme
72Oct / Nov 2021 · Paper 33 · Q13Show mark scheme →
Aa limit to the amount by which energy prices can increase
Ban increase in the tax on energy usage
Cenergy pricing policies that reflect the full social costs of energy use
Dsubsidies to suppliers of products designed to save energy
Mark scheme
73May / June 2021 · Paper 11 · Q17Show mark scheme →
AAll consumers and some producers will lose if OP1 becomes the minimum price.
BAll consumers will be unaffected if OP1 becomes the maximum price.
CNo producers will gain if OP2 becomes the maximum price.
DAll producers will gain if OP3 becomes the maximum price.
Mark scheme
74May / June 2021 · Paper 11 · Q18Show mark scheme →
AOPUV
BPQTU
CPRSU
DQRST
Mark scheme
75May / June 2021 · Paper 12 · Q15Show mark scheme →
Agovernment spending increases by US$240 million; consumer spending decreases by US$40 million
Bgovernment spending increases by US$240 million; consumer spending decreases by US$200 million
Cgovernment spending increases by US$480 million; consumer spending decreases by US$40 million
Dgovernment spending increases by US$480 million; consumer spending decreases by US$200 million
Mark scheme
76May / June 2021 · Paper 13 · Q16Show mark scheme →
AOERY
BOFMX
COGNY
DOHTX
Mark scheme
77May / June 2021 · Paper 13 · Q17Show mark scheme →
Aemployment in the construction industry
Bland prices in towns and cities
Crents of houses in the private sector
Dtotal government spending
Mark scheme
78May / June 2021 · Paper 31 · Q30Show mark scheme →
Ato increase allocative efficiency
Bto increase the incentive for producers to raise supply
Cto reduce consumer demand
Dto reduce expectations of inflation
Mark scheme
79May / June 2021 · Paper 33 · Q30Show mark scheme →
Ato increase allocative efficiency
Bto increase the incentive for producers to raise supply
Cto reduce consumer demand
Dto reduce expectations of inflation
Mark scheme
80Feb / March 2021 · Paper 12 · Q6Show mark scheme →
Aa reduction in farmers' revenue equal to PRSP1
Bexpenditure on sugar will be equal to PRMO
Cfarmers' revenue would be P1UNO
Dproducer surplus will be P1SP2
Mark scheme
81Feb / March 2021 · Paper 12 · Q14Show mark scheme →
ABoth rich and poor people would satisfy their demands equally.
BIllegal buying and selling through a black market would be prevented.
CRationing would be necessary to ensure a fair distribution of cereals.
DThe market would fail to clear leaving a surplus of cereals.
Mark scheme
82Feb / March 2021 · Paper 12 · Q17Show mark scheme →
AOP3
BP1P2
CP1P3
DP2P3
Mark scheme
83Feb / March 2021 · Paper 32 · Q15Show mark scheme →
Aa minimum price for the harmful foods
Ba subsidy for substitute foods
Can ad valorem tax on the harmful foods
Dan indirect tax on the harmful foods
Mark scheme