Economics and Business Studies Semester 1 Revision

If more seats are available on a plane than passengers who want to fly there, what exists?

• Equilibrium

• Excess demand

• Excess supply

• Scarcity

The making of goods and services is known as?

• production

• distribution

• consumption

• management

The economies of these country can be described as...

• free market

• command

• traditional

• mixed

What is a key characteristic of a market economic system?

• Government controls all resources

• Businesses are owned by the government

• Decisions about production and investment are guided by the price system

• All resources are shared equally among the population

In a market economy, who typically makes decisions about what to produce?

• The government

• Private individuals and businesses

• A central planning authority

• The military

Which of the following is true about a market economy?

• The government decides the allocation of all goods and services

• Prices are set by the central planning committee

• Only the state owns the means of production

• Supply and demand determine the prices of goods and services

Which of the following best describes the role of prices in a market economy?

• Prices are fixed by the government to ensure fairness

• Prices act as signals to both consumers and producers about supply and demand

• Prices are used to control the economy’s growth

• Prices have no effect on the economy

In a market economy, who benefits from competition?

• Consumers and businesses that innovate

• The government

• Only large businesses

• The central planning authority

The law of supply states that, all else being equal, an increase in price will lead to an (a)   in the quantity supplied.

When there is a shortage in the market, it occurs when the price is set (a)   the equilibrium price.