6 The Role of Markets... | 7 Demand

What are the three questions faced by all economies?

• What to produce, when to produce it and who receive it

• What to produce, how to produce it and who receives it

• Where to produce, how to produce and when to produce

• Where to produce, when to produce and why to produce

What encourages firms to produce what consumers demand?

• the chance to earn a high profit

• the chance to experience high unit cost of production

• the desire to attract new firms into industry

• the desire to keep revenue as low as possible

How are resources allocated in a market economy?

• by directives

• by price mechanism

• by directives or price mechanism

• by directives and price mechanism

What is meant by market forces?

• the interaction of demand and supply

• the interaction of firms and government

• the power of producers

• the power of state

Which of the following describes the economic aim of sellers of goods and services?

• a wide range of goods on offer

• a product made from best quality materials

• a higher-cost advertising campaign

• a high price to provide profit for the business

What is measured on the vertical axis of a demand diagram?

• cost

• price

• quantity demanded

• wants

What happens to people's willingness and ability to buy a product when its price falls?

• willingness increases | ability increases

• willingness increases | ability decreases

• willingness decreases | ability decreases

• willingness decreases | ability increases

An increase in demand is represented by:

• a movement down the demand curve

• a movement up the demand curve

• a shift to the left of the demand curve

• a shift to the right of the demand curve

The price of a product rises. What will happen to the demand for its complement?

• it will contract

• it will extend

• it will decrease

• it will increase

What is effective demand for a good or service?

• a want, backed up by money to buy the item

• a need , by all consumer desiring the item

• a demand depending on level of income

• a demand by one group of consumers.