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Leaving Cert Economics: Government intervention in markets

How often Government intervention in markets comes up on the Economics papers, every year it was asked, and questions to try.

HL Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

OL Asked on 5 of the last 5 Ordinary Level papers, most recently in 2025. banker

Government intervention in markets, Higher Level(7 marks)

Quick ones on Government intervention in markets.

(a)An economy where private firms and the State both provide goods and services is a…
  1. Command economy
  2. Mixed economy
  3. Free market economy
(b)A maximum price (price ceiling) only has an effect if it is set…
  1. Exactly at the equilibrium price
  2. Above the equilibrium price
  3. Below the equilibrium price
(c)A minimum price above equilibrium, such as minimum unit pricing of alcohol, creates…
  1. A surplus: quantity supplied exceeds demand
  2. No change in the quantity bought
  3. A shortage: quantity demanded exceeds supply
Show the answers

(a) Mixed economy

(b) Below the equilibrium price

(c) A surplus: quantity supplied exceeds demand

Your turn: Higher Level questions on Government intervention in markets.

Higher Level

Asked on 5 of the last 5 Higher Level papers, most recently in 2025. banker

Every paper, year by year

YearWhere it came up
2025Q6, Q11
2024Q3, Q7
2023Q7, Q15
2022Q3, Q12, Q13, Q16
2021Q4, Q13

Links open the State Examinations Commission’s paper for that year.

More Government intervention in markets questions

Government intervention in markets, 3 marks

Why might the State regulate a natural monopoly such as the electricity grid?

  1. To encourage several rival grids
  2. Because it only earns normal profit
  3. To stop it charging excessive prices
Show the answer

To stop it charging excessive prices

Building rival grids would waste resources, so one network is efficient. A regulator controls its charges so the single supplier cannot exploit consumers.

Government intervention in markets, 3 marks

Which problem often follows a price ceiling set below equilibrium?

  1. A rise in output as firms supply more at the low price
  2. A black market where goods sell above the legal price
  3. A surplus of the good that firms cannot sell
Show the answer

A black market where goods sell above the legal price

A ceiling below equilibrium creates a shortage. Buyers who cannot get the good at the legal price may pay more illegally, so black markets and queues appear.

Government intervention in markets, 3 marks

A €2 per-unit subsidy is paid to producers and the market price falls from €10 to €9. How much of the subsidy do consumers gain?

  1. €1 per unit, half the subsidy
  2. €2 per unit, all of it
  3. Nothing, as producers keep it all
Show the answer

€1 per unit, half the subsidy

Consumers gain the fall in price: €10 − €9 = €1. Producers now receive €9 + €2 = €11, so they keep the other €1. The split depends on the elasticities.

Ordinary Level

Asked on 5 of the last 5 Ordinary Level papers, most recently in 2025. banker

Every paper, year by year

YearWhere it came up
2025Q11, Q15
2024Q6, Q11
2023Q15
2022Q14, Q16
2021Q14

Links open the State Examinations Commission’s paper for that year.

More Government intervention in markets questions

Government intervention in markets, 2 marks

A maximum price set by law below the equilibrium price is called?

  1. A price floor
  2. A subsidy
  3. A price ceiling
Show the answer

A price ceiling

A price ceiling stops prices rising above a set level, for example a rent cap. Set below equilibrium, it causes a shortage because demand is greater than supply.

Government intervention in markets, 3 marks

A minimum price set above the equilibrium price will cause?

  1. A fall in supply
  2. A surplus
  3. A shortage
Show the answer

A surplus

At a price above equilibrium, sellers offer more than buyers want, so unsold stock builds up: a surplus. A minimum wage above equilibrium works the same way in the labour market.

Government intervention in markets, 3 marks

Minimum unit pricing on alcohol in Ireland aims to?

  1. Cut harmful drinking by ending very cheap alcohol
  2. Lower the price of drink sold in pubs and hotels
  3. Raise the supply of alcohol to off-licences
Show the answer

Cut harmful drinking by ending very cheap alcohol

Minimum unit pricing is a price floor based on how much alcohol a drink contains. It mainly raises the price of cheap, strong drink, to reduce heavy drinking of a demerit good.

Other Economics topics

All of Leaving Cert Economics