Public Sector Intervention is one of 9 topics in the Grade 10 Economics CAPS syllabus, covered across 3 lessons on Study Vault. Below are real practice questions from this topic with full worked answers.
Sample practice questions
Easy
1. An indirect tax is a tax levied on:
Goods and services
Personal income directly
Company profits only
Foreign exchange transactions only
Answer: Goods and services — Indirect taxes are levied on goods and services rather than directly on income, raising the effective cost of supplying the taxed good.
Easy
2. A payment made by government to producers to lower the effective cost of producing a good is called a:
Subsidy
Indirect tax
Minimum price
Excise duty
Answer: Subsidy — A subsidy lowers producers' effective cost of production, encouraging them to supply more, unlike an indirect tax which raises effective costs.
Medium
3. What effect does an indirect tax on a good typically have on the position of the supply curve for that good?
Answer: It shifts the supply curve to the left — An indirect tax raises the effective cost of supplying a good, causing the entire supply curve to shift to the left (a decrease in supply).
