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intervention aims to improve resource allocation when markets produce inefficient outcomes, moving production and consumption towards the level that maximises social welfare."},{"text":"To eliminate all private-sector production and replace markets with central planning.","correct":false,"explanation":"Intervention does not normally abolish private markets; it addresses specific inefficiencies such as externalities, information gaps or public-good provision. The correct purpose is to correct market failure and move output towards the social optimum."},{"text":"To guarantee that every consumer pays the same price for every good.","correct":false,"explanation":"Different goods have different costs, demands and taxes, so intervention does not require identical prices. Its purpose is to correct market failure and move output closer to the social optimum."},{"text":"To maximise government tax revenue regardless of the effect on welfare.","correct":false,"explanation":"Raising revenue can be a consequence of intervention, but maximising revenue is not its central economic purpose. Government intervention primarily corrects market failure and improves allocative efficiency."}]},{"id":"477d7b37-169a-4073-9214-7b8c3f3f2d67","cardType":"basic","points":2,"front":"How does an indirect tax affect the market for a harmful good?","back":"

Raises the price faced by consumers.
Reduces quantity demanded towards the social optimum.

","mcqOptions":[{"text":"

Raises the price faced by consumers.
Reduces quantity demanded towards the social optimum.

","correct":true,"explanation":"An indirect tax raises the consumer price of a harmful good. This reduces quantity demanded, helping to internalise the external cost and move consumption towards the socially efficient level."},{"text":"

Lowers the price faced by consumers.
Raises quantity demanded towards the social optimum.

","correct":false,"explanation":"These are the usual effects of a subsidy, not an indirect tax. Tax increases the consumer price and generally reduces quantity demanded, especially when consumption creates negative externalities."},{"text":"

Raises the price faced by consumers.
Raises quantity demanded towards the social optimum.

","correct":false,"explanation":"Although the tax raises the consumer price, the higher price causes a movement along the demand curve towards lower quantity demanded. Quantity does not rise when the good becomes more expensive."},{"text":"

Lowers the price faced by consumers.
Reduces quantity demanded towards the social optimum.

","correct":false,"explanation":"An indirect tax does not lower the consumer price; it raises it. The reduction in quantity demanded is correct, but the price effect is reversed, so this is not the full answer."}]},{"id":"1ab6f6fa-7d81-4ea4-98a4-e1bf38404f6c","cardType":"basic","points":1,"front":"How does a specific tax change the supply curve?","back":"It shifts supply upwards and to the left by the same amount at every quantity.","mcqOptions":[{"text":"It shifts supply upwards and to the left by the same amount at every quantity.","correct":true,"explanation":"A specific tax is a fixed amount per unit. The vertical distance between the original and new supply curves is therefore constant at every output, shifting supply upwards and to the left by the same amount."},{"text":"It shifts supply downwards and to the right by the same amount at every quantity.","correct":false,"explanation":"A tax raises firms’ costs, so supply contracts rather than expands. The supply curve shifts upwards and to the left by the fixed tax amount at every quantity."},{"text":"It makes the supply curve pivot upwards and to the left as output increases.","correct":false,"explanation":"A pivot describes a changing tax amount, usually an ad valorem tax. A specific tax is fixed per unit, so the supply curve shifts upwards and to the left by the same amount everywhere."},{"text":"It shifts supply upwards by a larger amount at higher quantities.","correct":false,"explanation":"A larger shift at higher quantities would imply that the tax per unit rises with price or output. A specific tax remains constant per unit, producing an equal upward shift at every quantity."}]},{"id":"85a61a55-7af4-49c0-8b69-1847a1cccac2","cardType":"basic","points":1,"front":"How does an ad valorem tax change the supply curve?","back":"It makes the supply curve pivot because the tax rises as price rises.","mcqOptions":[{"text":"It makes the supply curve pivot because the tax rises as price rises.","correct":true,"explanation":"An ad valorem tax is a percentage of price. As the price rises, the tax per unit becomes larger, so the supply curve pivots rather than shifting by a constant vertical distance."},{"text":"It shifts the supply curve upwards and to the left by the same amount at every quantity.","correct":false,"explanation":"A constant shift applies to a specific tax, which has the same monetary amount per unit. An ad valorem tax varies with price, so it makes the supply curve pivot."},{"text":"It shifts the supply curve downwards and to the right because firms receive a percentage of the price.","correct":false,"explanation":"A percentage tax reduces the price received by producers and raises the consumer price, increasing the cost wedge. Supply therefore pivots upwards and to the left, not downwards and right."},{"text":"It leaves the supply curve unchanged because the tax is collected from consumers.","correct":false,"explanation":"Even when legally paid by consumers, an indirect tax affects the price relationship between consumers and producers. The supply curve relevant to the market therefore pivots because the percentage tax rises with price."}]},{"id":"72198ce8-493e-4c53-8211-b27e977590f7","cardType":"basic","points":1,"front":"How is government revenue from an indirect tax calculated?","back":"Tax per unit × quantity sold.","mcqOptions":[{"text":"Tax per unit × quantity sold.","correct":true,"explanation":"Each unit sold generates the tax amount, so total government revenue is found by multiplying the tax per unit by the number of units sold."},{"text":"Tax per unit + quantity sold.","correct":false,"explanation":"Revenue is generated across all units, so the per-unit tax must be multiplied by quantity sold. Adding the two figures combines unlike measures and does not calculate total revenue."},{"text":"Tax per unit ÷ quantity sold.","correct":false,"explanation":"Dividing the tax by the number of units would reduce the figure as sales increase, which is the opposite of how total tax revenue behaves. Revenue equals tax per unit multiplied by quantity sold."},{"text":"Price per unit × quantity demanded.","correct":false,"explanation":"Price multiplied by quantity demanded gives consumer spending, not government tax revenue. Tax revenue specifically uses the tax amount per unit multiplied by the quantity actually sold."}]},{"id":"c0cfa7ae-3c9d-40a5-8e7e-b209884aa899","cardType":"basic","points":1,"front":"What revenue does a £0.24 per-litre tax raise if 500 million litres are sold?","back":"£120 million because $0.24 \\times 500{,}000{,}000 = 120{,}000{,}000$.","mcqOptions":[{"text":"£120 million because $0.24 \\times 500{,}000{,}000 = 120{,}000{,}000$.","correct":true,"explanation":"Multiplying £0.24 by 500 million litres gives £120 million. The tax applies to every litre sold, so total revenue is the per-litre tax multiplied by total litres."},{"text":"£12 million because $0.24 \\times 50{,}000{,}000 = 12{,}000{,}000$.","correct":false,"explanation":"This treats 500 million litres as 50 million, losing one factor of ten. Using the stated quantity gives $0.24 \\times 500{,}000{,}000 = 120{,}000{,}000$, or £120 million."},{"text":"£1.2 billion because $2.40 \\times 500{,}000{,}000 = 1{,}200{,}000{,}000$.","correct":false,"explanation":"This moves the decimal one place and uses £2.40 rather than £0.24 per litre. The stated tax is £0.24, producing £120 million when multiplied by 500 million litres."},{"text":"£2.08 billion because $0.24 + 500{,}000{,}000 = 2{,}080{,}000{,}000$.","correct":false,"explanation":"Adding the tax and quantity is not a valid revenue calculation and combines unlike units. Revenue requires multiplication: $0.24 \\times 500{,}000{,}000 = 120{,}000{,}000$, or £120 million."}]},{"id":"74832c01-7272-427e-92b0-afcddfa450ca","cardType":"basic","points":1,"front":"Who bears more of an indirect tax when demand is relatively inelastic?","back":"Consumers bear more of the tax burden.","mcqOptions":[{"text":"Consumers bear more of the tax burden.","correct":true,"explanation":"When demand is relatively price-inelastic, consumers reduce quantity demanded only slightly after a price rise. Producers can therefore pass a larger share of the indirect tax on to consumers."},{"text":"Producers bear more of the tax burden.","correct":false,"explanation":"Producers bear more when demand is relatively elastic and consumers can readily reduce purchases. With inelastic demand, consumers continue buying and bear the larger share through higher prices."},{"text":"The government bears more of the tax burden.","correct":false,"explanation":"The government collects the tax rather than bearing its incidence in the usual market analysis. With relatively inelastic demand, the larger burden falls on consumers through higher prices."},{"text":"Consumers and producers always bear exactly equal shares of the tax burden.","correct":false,"explanation":"Tax incidence depends on the relative elasticities of demand and supply, so equal sharing is not automatic. Inelastic demand means consumers bear more of the tax burden."}]},{"id":"f250e563-4af7-486a-9e73-6404f80a1e8e","cardType":"basic","points":2,"front":"How does a subsidy affect price and quantity?","back":"It lowers price and raises quantity, encouraging consumption.","mcqOptions":[{"text":"It lowers price and raises quantity, encouraging consumption.","correct":true,"explanation":"A subsidy lowers producers’ effective costs, shifting supply outwards. The market equilibrium generally has a lower consumer price and a higher quantity traded, encouraging consumption."},{"text":"It raises price and lowers quantity, discouraging consumption.","correct":false,"explanation":"These are the typical effects of an indirect tax. A subsidy encourages consumption by reducing the consumer price and increasing the equilibrium quantity."},{"text":"It lowers price and lowers quantity, restricting consumption.","correct":false,"explanation":"The lower price encourages consumers to buy more, while the subsidy increases producers’ willingness to supply. Therefore quantity rises rather than falls."},{"text":"It raises price and raises quantity, encouraging consumption.","correct":false,"explanation":"A subsidy normally raises quantity but lowers the price paid by consumers. The price may rise for producers in some incidence arrangements, but it does not generally rise for consumers."}]},{"id":"1d9c799b-37df-469f-baec-b1f000ddfcd4","cardType":"basic","points":1,"front":"How does the cost of a subsidy to the government depend on output?","back":"Government cost equals subsidy per unit × quantity produced.","mcqOptions":[{"text":"Government cost equals subsidy per unit × quantity produced.","correct":true,"explanation":"The government pays the subsidy on each eligible unit produced. Multiplying the subsidy per unit by total quantity produced gives the total cost to the government."},{"text":"Government cost equals subsidy per unit + quantity produced.","correct":false,"explanation":"Adding the subsidy and output does not calculate payments across all units and combines unlike quantities. Total subsidy cost is the per-unit subsidy multiplied by quantity produced."},{"text":"Government cost equals price per unit × quantity demanded.","correct":false,"explanation":"Price multiplied by quantity demanded measures consumer expenditure, not the government’s subsidy bill. The government cost depends on the subsidy amount paid for each unit produced."},{"text":"Government cost equals subsidy per unit ÷ quantity produced.","correct":false,"explanation":"Dividing by output would make the calculated cost fall as more units are subsidised. The total bill rises with eligible output, so it is calculated by multiplication."}]},{"id":"b7c34bf2-8bb5-482e-862c-488fdac3c1fb","cardType":"basic","points":2,"front":"What happens when a maximum price is set below equilibrium?","back":"Demand exceeds supply, creating a shortage.","mcqOptions":[{"text":"Demand exceeds supply, creating a shortage.","correct":true,"explanation":"A maximum price below equilibrium prevents the market price from rising to clear demand. At the controlled price, consumers want more than firms supply, creating a shortage."},{"text":"Supply exceeds demand, creating a surplus.","correct":false,"explanation":"A surplus is associated with a binding minimum price above equilibrium. A maximum price below equilibrium creates the opposite situation, with demand exceeding supply."},{"text":"Demand equals supply, creating market equilibrium.","correct":false,"explanation":"Demand equals supply only at the equilibrium price, unless another mechanism clears the market. A binding maximum price below equilibrium leaves excess demand and creates a shortage."},{"text":"Demand falls below supply, creating unsold stock.","correct":false,"explanation":"The controlled low price encourages demand and discourages supply. Consequently demand exceeds supply, rather than falling below it and creating unsold stock."}]},{"id":"de878b44-e80e-483f-9810-e7971e6ed4a5","cardType":"basic","points":3,"front":"What problems can result from a shortage caused by a maximum price?","back":"

Queues
Rationing
Black markets

","mcqOptions":[{"text":"

Queues
Rationing
Black markets

","correct":true,"explanation":"A binding maximum price creates excess demand. Consumers may queue, non-price rationing may decide who receives the good, and illegal markets may develop where it is resold at higher prices."},{"text":"

Surplus stock
Producer subsidies
Lower demand

","correct":false,"explanation":"These outcomes do not describe the typical shortage caused by a maximum price. The shortage instead tends to create queues, rationing and black markets because demand exceeds supply."},{"text":"

Falling queues
Unlimited availability
Lower black-market prices

","correct":false,"explanation":"A price below equilibrium increases excess demand and makes availability more restricted. This encourages longer queues and black-market activity, not unlimited supply or lower unofficial prices."},{"text":"

Excess supply
Unsold output
Disposal costs

","correct":false,"explanation":"These are more closely associated with a minimum price above equilibrium, which creates a surplus. A maximum price below equilibrium creates excess demand and may cause queues, rationing and black markets."}]},{"id":"0f7a2fd4-5219-4294-84c7-ee557abdf132","cardType":"basic","points":2,"front":"What happens when a minimum price is set above equilibrium?","back":"Supply exceeds demand, creating a surplus.","mcqOptions":[{"text":"Supply exceeds demand, creating a surplus.","correct":true,"explanation":"A minimum price above equilibrium prevents the price from falling enough to clear the market. Producers want to supply more while consumers demand less, creating a surplus."},{"text":"Demand exceeds supply, creating a shortage.","correct":false,"explanation":"This is the effect of a binding maximum price below equilibrium. A minimum price above equilibrium instead leaves supply greater than demand and creates surplus output."},{"text":"Supply equals demand, creating market equilibrium.","correct":false,"explanation":"The equilibrium price is where supply equals demand. Setting a binding minimum price above that level moves the market away from equilibrium and creates excess supply."},{"text":"Supply falls below demand, creating queues.","correct":false,"explanation":"A minimum price above equilibrium encourages supply and discourages demand. The result is unsold surplus, whereas queues and shortages are associated with a low maximum price."}]},{"id":"398d72ba-3389-4bd8-b124-8afc21330e03","cardType":"basic","points":2,"front":"Why might the government need to buy surplus output under a minimum price?","back":"The price floor creates excess supply that has not been bought by consumers.","mcqOptions":[{"text":"The price floor creates excess supply that has not been bought by consumers.","correct":true,"explanation":"A binding minimum price keeps the price above equilibrium, so firms supply more than consumers demand. The government may buy the unsold excess to support the price floor."},{"text":"The price floor creates excess demand that firms cannot supply.","correct":false,"explanation":"Excess demand results from a maximum price below equilibrium. A minimum price above equilibrium raises supply and reduces demand, leaving excess supply."},{"text":"The price floor creates lower tax revenue that must be replaced by government purchases.","correct":false,"explanation":"Government purchases are made to remove surplus output, not primarily to replace lost tax revenue. The price floor creates excess supply that consumers have not bought."},{"text":"The price floor creates higher consumer demand that must be met by public stock.","correct":false,"explanation":"A price above equilibrium makes consumers demand less, not more. Government purchases may absorb the resulting excess supply, rather than meeting additional consumer demand."}]},{"id":"432444c7-191a-4e04-a220-9195370c96ff","cardType":"basic","points":2,"front":"Why might an indirect tax fail to reduce consumption significantly?","back":"If demand is price-inelastic, quantity changes very little.","mcqOptions":[{"text":"If demand is price-inelastic, quantity changes very little.","correct":true,"explanation":"With price-inelastic demand, consumers are relatively unresponsive to price changes. An indirect tax can raise price substantially while reducing quantity demanded only slightly."},{"text":"If demand is price-elastic, quantity changes very little.","correct":false,"explanation":"Price-elastic demand means quantity responds strongly to a price change. Quantity changes very little when demand is price-inelastic, which can limit the tax’s effect on consumption."},{"text":"If supply is price-inelastic, quantity changes very little.","correct":false,"explanation":"Supply elasticity affects how producers respond and how the tax burden is shared, but the direct reason consumption changes little is price-inelastic demand."},{"text":"If demand is unit elastic, quantity changes very little.","correct":false,"explanation":"Unit elastic demand means quantity changes proportionally to price, not that it barely changes. Consumption is relatively unresponsive to tax-induced price rises when demand is price-inelastic."}]},{"id":"371e06b4-923b-4cb0-be2a-17ce7041fda4","cardType":"basic","points":2,"front":"How do tradable pollution permits encourage firms to reduce emissions?","back":"

Firms that cut emissions cheaply can sell spare permits.
Heavy polluters must buy more permits.

","mcqOptions":[{"text":"

Firms that cut emissions cheaply can sell spare permits.
Heavy polluters must buy more permits.

","correct":true,"explanation":"Tradable permits attach an opportunity cost to emissions. Firms able to cut emissions cheaply can sell unused permits, while firms facing high abatement costs must buy additional permits."},{"text":"

Firms that cut emissions cheaply must buy spare permits.
Heavy polluters can sell more permits.

","correct":false,"explanation":"This reverses the trading incentives. Firms that reduce emissions have permits to spare and can sell them; heavy polluters exceed their allocation and need to buy permits."},{"text":"

Firms that cut emissions cheaply can destroy spare permits.
Heavy polluters receive free additional permits.

","correct":false,"explanation":"Destroying permits may reduce supply but does not provide the direct financial reward of selling them, while giving heavy polluters more permits weakens the incentive to reduce emissions."},{"text":"

All firms must pay the same permit charge.
Heavy polluters can emit without permits.

","correct":false,"explanation":"Permit trading creates a market price and requires firms to hold permits for emissions. Heavy polluters face the cost of buying more permits, rather than being allowed to emit freely."}]},{"id":"86918825-93cf-455e-a60f-142a6a70f776","cardType":"basic","points":2,"front":"Why does the state provide public goods directly?","back":"The free-rider problem can otherwise create a missing market.","mcqOptions":[{"text":"The free-rider problem can otherwise create a missing market.","correct":true,"explanation":"Public goods are non-excludable, so people can benefit without paying. This free-rider problem weakens private firms’ ability to charge consumers and can result in no market provision."},{"text":"The profit-maximisation problem can otherwise create a missing market.","correct":false,"explanation":"Profit maximisation does not specifically explain why public goods are underprovided. Their non-excludability allows consumers to free-ride, creating a missing market and justifying direct state provision."},{"text":"The price-inelasticity problem can otherwise create a missing market.","correct":false,"explanation":"Price inelasticity concerns how quantity responds to price, not whether consumers can avoid paying. Public goods create a missing market because non-excludability encourages free-riding."},{"text":"The economies-of-scale problem can otherwise create a missing market.","correct":false,"explanation":"Economies of scale may affect market structure, but they are not the defining reason public goods lack private provision. The free-rider problem makes charging beneficiaries difficult."}]},{"id":"58498c3c-9096-4f3d-a360-7152121cf295","cardType":"basic","points":2,"front":"How can provision of information correct market failure?","back":"It closes information gaps, helping consumers judge true costs and benefits.","mcqOptions":[{"text":"It closes information gaps, helping consumers judge true costs and benefits.","correct":true,"explanation":"Information provision reduces imperfect information by showing consumers the true costs and benefits of choices, allowing better-informed decisions and reducing the misallocation of resources that causes market failure."},{"text":"It increases information gaps, making consumers ignore true costs and benefits.","correct":false,"explanation":"Information provision is intended to reduce, not increase, information gaps. Better information helps consumers assess the true costs and benefits of consumption and make decisions closer to the socially efficient outcome."},{"text":"It removes external costs, ensuring producers pay all social costs.","correct":false,"explanation":"Information cannot directly remove external costs or guarantee that producers pay them. The correct effect is closing information gaps so consumers can judge true costs and benefits more accurately."},{"text":"It guarantees equal incomes, helping consumers afford all socially beneficial goods.","correct":false,"explanation":"Providing information does not redistribute income or guarantee affordability. It corrects market failure by closing information gaps, enabling consumers to assess true costs and benefits when making choices."}]},{"id":"27e9e913-ff87-4285-bfd4-0f0d6acd8ed0","cardType":"basic","points":1,"front":"What must regulation have to change behaviour effectively?","back":"Monitoring and enforcement backed by penalties.","mcqOptions":[{"text":"Monitoring and enforcement backed by penalties.","correct":true,"explanation":"Regulation changes behaviour effectively when authorities monitor compliance and enforce the rules, with penalties making non-compliance costly enough to deter firms and individuals from breaking them."},{"text":"Advertising and persuasion backed by voluntary promises.","correct":false,"explanation":"Persuasion and voluntary promises may not prevent firms from ignoring regulation because they impose no reliable consequence. Effective regulation needs monitoring and enforcement backed by penalties."},{"text":"Low prices and subsidies backed by higher consumer demand.","correct":false,"explanation":"Prices and subsidies may influence market incentives, but they do not ensure that a regulation is followed. Behaviour changes reliably when monitoring and enforcement are supported by penalties."},{"text":"Written guidance and targets backed by public approval.","correct":false,"explanation":"Guidance and targets can clarify expectations, but public approval alone may not deter non-compliance. Effective regulation requires monitoring and enforcement, with penalties for breaking the rules."}]},{"id":"d18d3125-12da-48e1-97e1-8b9dce36c9b9","cardType":"cloze","points":null,"front":"An indirect tax shifts the supply curve [ ].","back":"An indirect tax shifts the supply curve upwards and to the left.","mcqOptions":[{"text":"upwards and to the left","correct":true,"explanation":"An indirect tax raises firms’ costs of supplying each quantity. The supply curve therefore shifts upwards and to the left, reflecting a higher price required for every output level."},{"text":"downwards and to the right","correct":false,"explanation":"A downwards and rightward shift represents lower production costs, which is associated with a subsidy. An indirect tax raises costs, shifting supply upwards and to the left."},{"text":"upwards and to the right","correct":false,"explanation":"The upward movement reflects higher costs, but the rightward movement incorrectly suggests greater supply at each price. An indirect tax shifts the supply curve upwards and to the left."},{"text":"downwards and to the left","correct":false,"explanation":"This combines a lower-cost shift with reduced quantity supplied and does not show the standard tax effect. An indirect tax raises costs, shifting supply upwards and to the left."}]},{"id":"7e9a8eb2-5a70-4d0c-821b-17cdba98b6ed","cardType":"cloze","points":null,"front":"A subsidy shifts the supply curve [ ].","back":"A subsidy shifts the supply curve downwards and to the right.","mcqOptions":[{"text":"downwards and to the right","correct":true,"explanation":"A subsidy lowers firms’ production costs, so they are willing to supply more at every price. The supply curve consequently shifts downwards and to the right."},{"text":"upwards and to the left","correct":false,"explanation":"An upwards and leftward shift indicates higher production costs, which is the effect of an indirect tax. A subsidy lowers costs and shifts supply downwards and to the right."},{"text":"downwards and to the left","correct":false,"explanation":"Although the subsidy lowers costs, the leftward direction incorrectly suggests less supply. Lower production costs increase supply, causing a downwards and rightward shift."},{"text":"upwards and to the right","correct":false,"explanation":"The rightward direction suggests increased supply, but the upward direction suggests higher costs. A subsidy lowers firms’ costs, so supply shifts downwards and to the right."}]},{"id":"1a6a7231-ee50-4fd5-b0fa-de9441354908","cardType":"cloze","points":null,"front":"A maximum price only bites when set [ ].","back":"A maximum price only bites when set below the equilibrium price.","mcqOptions":[{"text":"below the equilibrium price","correct":true,"explanation":"A maximum price is binding only when it is below the equilibrium price. At that level, the legal price prevents the market from reaching equilibrium and creates excess demand."},{"text":"above the equilibrium price","correct":false,"explanation":"A maximum price above equilibrium does not constrain the market because the equilibrium price remains legally available. It only bites when set below the equilibrium price."},{"text":"equal to the equilibrium quantity","correct":false,"explanation":"A price control must be compared with the equilibrium price, not the equilibrium quantity. A maximum price becomes binding when it is set below the equilibrium price."},{"text":"below the equilibrium quantity","correct":false,"explanation":"The binding condition for a maximum price concerns price, so comparing it with quantity is a category error. The maximum price must be below the equilibrium price to affect the market."}]},{"id":"0141c3f3-176c-4e88-947b-18e810c752b9","cardType":"cloze","points":null,"front":"A minimum price only bites when set [ ].","back":"A minimum price only bites when set above the equilibrium price.","mcqOptions":[{"text":"above the equilibrium price","correct":true,"explanation":"A minimum price is binding only when it is above the equilibrium price. At that level, the legal price prevents the market from falling to equilibrium and creates excess supply."},{"text":"below the equilibrium price","correct":false,"explanation":"A minimum price below equilibrium does not constrain the market because equilibrium remains legally attainable. It only bites when set above the equilibrium price."},{"text":"equal to the equilibrium quantity","correct":false,"explanation":"The relevant comparison for a minimum price is with the equilibrium price, not quantity. The policy becomes binding when the legal minimum is above the equilibrium price."},{"text":"above the equilibrium quantity","correct":false,"explanation":"A minimum price is assessed against the market price, so equilibrium quantity is irrelevant to whether it binds. The minimum price must be above the equilibrium price."}]},{"id":"f9b969f1-c0d5-426f-b960-117852528ef5","cardType":"cloze","points":null,"front":"A tradable pollution permit scheme [ ] and allows firms to trade permits.","back":"A tradable pollution permit scheme caps total emissions and allows firms to trade permits.","mcqOptions":[{"text":"caps total emissions","correct":true,"explanation":"A tradable permit scheme sets a maximum total quantity of emissions through the number of permits issued. Firms can then trade permits, allowing reductions to be allocated efficiently."},{"text":"taxes total emissions","correct":false,"explanation":"A tax puts a price on emissions but does not directly fix their total quantity. A tradable permit scheme caps total emissions and allows firms to trade permits."},{"text":"subsidises total emissions","correct":false,"explanation":"Subsidising emissions would encourage pollution rather than limit it. Tradable permits restrict the total number of emissions allowed by capping total emissions."},{"text":"abolishes total emissions","correct":false,"explanation":"Tradable permits usually reduce and limit emissions rather than eliminate them completely. The scheme caps total emissions, while trading helps firms meet the cap at lower cost."}]},{"id":"292960a4-25e7-44f4-9b58-a0467a62ceef","cardType":"cloze","points":null,"front":"Market-based pollution controls can be efficient because they allow emission cuts to occur where they are [ ].","back":"Market-based pollution controls can be efficient because they allow emission cuts to occur where they are cheapest.","mcqOptions":[{"text":"cheapest","correct":true,"explanation":"Market-based controls allow firms with the lowest-cost abatement opportunities to reduce emissions more, while higher-cost firms buy permits or make smaller cuts, lowering the overall cost of pollution reduction."},{"text":"most expensive","correct":false,"explanation":"Forcing the most expensive emission cuts would raise the total cost of achieving a given reduction. Market-based controls are efficient because cuts occur where they are cheapest."},{"text":"equally costly","correct":false,"explanation":"Market-based controls do not require every firm to face identical abatement costs. Trading directs reductions towards firms able to make emission cuts most cheaply."},{"text":"largest in physical quantity","correct":false,"explanation":"The largest physical reductions are not necessarily the most efficient because firms have different abatement costs. Market-based controls prioritise emission cuts where they are cheapest."}]}]}],"examCountdown":{"examDate":"2027-05-10","paperLabel":"Paper 1"},"heading":"1.4.1 Government intervention in markets","title":"1.4.1 Government intervention in markets Flashcards","topbar":{"backHref":"/a-level/economics/edexcel/a/flashcards"},"topicSidebar":"$L38"}]}],"topicId":"65d5f111-e8f6-5486-ae7b-ac51c44a1e87","walled":"$L39"}],"$L3a","$L3b"]