Market Economic System

What is a benefit of the market system?

• A Competition ensures choice for consumers.

• B Prices equal supply costs

• C Unemployment is kept to a minimum

• D Wage differentials are small

What is an advantage of a market economy?

• A an absence of poverty

• B Consumer sovereignty

• C Full employment

• D firms have monopoly power

In a market system, what encourages firms to keep their costs low?

• A Competition

• B Subsidies

• C Taxation

• D Rules and Regulations

What encourages firms to produce what consumers demand?

• A the desire to keep revenue low

• B the chance to make high profit

• C the chance to keep cost of production high

• D the desire to attract firms in the industry

Who decide what to produce, how to produce and for whom to produce?

• A government

• B producers

• C consumers

• D producers and consumers

In a market economy, there is limited government intervention.

• True

• False

A market economic system is one where resources are owned and controlled by private sector

• False

• True

Resources are allocated by (a)   [ Price mechanism, consumers)

An increase in demand for a product causes price to (a)   . ( rise, fall)

This provides a (a)   to producers that the good is profitable. ( signal, new)