Cima C04 Exam Question No 48

Question No 48:

Which ONE of the following statements is true?

A. A legal maximum price for a good always results in a shortage of the good.
B. A price fall for a good will lead to an increase in demand for that good.
C. A price fall for a good will always lead to a contraction in supply of the good.
D. An excess supply of a good arises when a legal minimum price is set below equilibrium price.

Answer: C

Cima C04 Exam Question No 47

Question No 47:

A government may prevent horizontal mergers in an industry because?

A. By controlling sources of supply, the merged firms can prevent the entry of new firms into the industry
B. There will be a lack of synergy between the merging companies
C. The merged firms will be unable to reduce costs
D. Consumers may suffer if the merged firm achieve market dominance

Answer: D

Cima C04 Exam Question No 46

Question No 46

If the production of a good involves an external social cost, the appropriate policy for the government is to:

A. Take the industry into state ownership
B. Impose an indirect tax on the good
C. Impose a higher rate tax on the profits of the producers
D. Provide a subsidy for the consumers of the product

Answer: B

Cima C04 Exam Question No 45

Question No 45:

All of the following would shift the supply curve for a product to the right except one. Which ONE is the EXCEPTION?

A. A government subsidy
B. An improvement in production techniques
C. Lower input prices
D. An indirect tax on the product

Answer: D