1.4 Concept of Allocation of Resources

What are the three questions faced by all economies?

• What to produce, when to produce it and who receives 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 costs of production

• The desire to attract new firms into the industry

• The desire to keep revenue as low as possible

How are resources allocated in a market economy?

• By directives

• By the price mechanism

• By directives or the price mechanism

• By directives and the price mechanism

An economic system answers three questions about goods and services. Which of the following option is NOT one of these questions?

• What to produce?

• Who receives the products?

• How to produce?

• Where to produce?

In what type of economy allocation do individuals and firms determine what will be produced?

• Government

• Command

• Market

• Traditional

In economics there are 4 types of resources. Which of the following is NOT a type of resource?

• Land

• Money

• Labor

• Entrepreneurship

What makes a resource or good scarce?

• Must be limited in quanity

• Must be desirable

• Must have more than one use

• All of these answers.

What is the function of the price mechanism in a market economy?

• allocating resources and guiding choices

• allowing governments to provide price stability

• enabling markets to operate fairly

• preventing competitors from entering a market

Resource allocation deals with the ______________ of _____________ and the methods by which this is done.

• giving, services

• distribution, resources

• allocation, expenses

• None of the above

The factor of production that oversees resource allocation is _______________

• Land

• Enterprise

• Labour

• Capital