Y10 Economics - C6 Role of Markets in Allocating Resources

What is the market system primarily used for?

• Increasing government control

• Eliminating competition

• Allocating scarce resources

• Allocating abundant resources

Who are the buyers in a market?

• People who supply goods

• People who demand goods

• People who regulate prices

• People who produce goods

What happens at market equilibrium?

• Excess demand occurs

• Prices are fixed

• Excess supply occurs

• Demand matches supply

What occurs when the market price is above the equilibrium price?

• Market equilibrium

• Market disequilibrium

• Increased demand

• Decreased supply

What is the effect of a price fall on customer behavior?

• Customers demand refunds

• Customers buy less

• Customers buy more

• Customers stop buying

Which question is NOT one of the key economic questions?

• What production should take place?

• How should production take place?

• For whom should production take place?

• Who should produce the goods?

What does the price mechanism rely on?

• Government regulations

• Fixed pricing strategies

• Consumer preferences only

• Market forces of demand and supply

What is a feature of the price mechanism?

• No competition

• Equal distribution of resources

• Allocation based on price

• Government interference

What determines wage rates in the price mechanism?

• Employee satisfaction

• Government policies

• Demand for labor

• Cost of living

What happens when there is excess supply in the market?

• Prices increase

• Prices decrease

• Demand increases

• Supply decreases