Lesson 4.1.8.1
4.1.8.1 How markets and prices allocate resources Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.8.1, How markets and prices allocate resources: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
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Which function of price allocates scarce goods to buyers when demand exceeds supply?
- Signalling function
- Incentive function
- Allocative function
- Rationing function
-
Which price function informs producers that demand for a good has increased?
- Rationing function
- Signalling function
- Administrative function
- Incentive function
-
Which function of price provides a profit motive for firms to increase output?
- Rationing function
- Regulating function
- Signalling function
- Incentive function
-
What key advantage does the price mechanism offer when allocating resources?
- Guaranteed income equality
- Free provision
- Decentralised decision-making
- Central economic planning
-
On what basis does the price mechanism allocate scarce resources among consumers?
- Consumer need
- Ability to pay
- Equal distribution
- Personal merit
-
What is a major concern when extending the price mechanism into blood donation?
- Altruism is diminished
- Supply always drops
- Quality automatically improves
- Prices become fixed
-
What condition exists in a market when the price is above equilibrium?
- Excess supply
- Market equilibrium
- Excess demand
- Government surplus
-
How do prices transmit information to buyers and sellers in a market economy?
- Government quotas
- Fixed subsidies
- Central directives
- Price signals
-
Why is the price mechanism described as an impersonal method of resource allocation?
- It ignores need
- It uses planning
- It applies morals
- It favours friends
-
What primary change occurs when extending the price mechanism into non-market activities?
- Reduced price flexibility
- Lower consumer choice
- Total market failure
- Commercialisation of services
-
Which scenario demonstrates the rationing function of prices in the housing market?
- Lower mortgage rates
- Rising rental prices
- Government rent caps
- Increased house construction
-
How does the price mechanism determine 'for whom' goods are produced?
- Through queuing systems
- By income distribution
- Through rationing coupons
- By central lottery
-
How does a free market restore equilibrium when excess demand exists?
- Price rises
- Demand increases
- Supply decreases
- Price falls
-
What factor primarily determines 'for whom' goods are produced in a market economy?
- Social need
- Purchasing power
- Family size
- Geographical location
-
What is a main argument against introducing price mechanisms into public services?
- Increased state control
- Inequity of access
- Lack of competition
- Slower resource allocation
-
A price increase deters some consumers from purchasing a good. Which price function does this illustrate?
- Incentive function
- Rationing function
- Allocative function
- Signalling function
-
What main factor causes price signals in a market to give inaccurate information to producers?
- Externalities
- High competition
- Price elasticity
- Product differentiation
-
Under which market condition does the price mechanism allocate resources most efficiently?
- Monopoly power
- Perfect competition
- Government control
- High inflation
-
According to the law of demand, what happens to quantity demanded when price falls?
- It decreases
- It fluctuates
- It increases
- It stays unchanged
-
Which function of price is most distorted when a monopolist sets prices above competitive levels?
- Signalling function
- Medium of exchange
- Store of value
- Rationing function
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