OCR GCSE Economics 2.4 Price

What Term was coined by Adam Smith that represents what market forces does for buyers and sellers?

• Invisible Foot

• Invisible Hand

• Market Equilibirum

• Allocative Efficiency

Which function of the price mechanism refers to the idea that prices act as signals to consumers and producers?

• Signalling

• Transmission of Preferences

• Rationing

• Incentive

Allocative efficiency is defined as?

• The interaction of the free market forces of demand and supply to establish the general level of price for a good or service.

• Factors that determine price levels and the availability of goods and services in an economy without government intervention.

• How scarce resources are distributed among producers, and how scarce goods and services are distributed among consumers.

• None of the above

This market is experiencing excess demand. At what quantity level is the market producing at if prices are at P2?

• Q1

• Q2

• Q3

• Q4

What could be the most likely reason for why there is excess demand in a market

• a Reduction in the cost of production

• The introduction of a new firm into the market

• Consumers respond to price signals but producers do not.

• There is no reason

Which of these factors is most likely to cause a shift in demand?

• Subsidies

• Poor climate

• Improvements in technology

• A change in income

Which of these factors is most likely to cause a shift in supply?

• Subsitutes

• Compliments

• A change in consumer tastes

• A change in government regulations

What is required by firms in order to supply a market?

• Division of labour

• Factors of production

• Specialisation

• Elasticity

Which diagram shows the effect of rising cost of oil?

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If prices increased from £1 to £5 for hand sanitiser and demand decreased from 10,000 units to 8,000 units. What would the price elasticity of demand be?

• 5

• 2.5

• 0.05

• 0.5