Question 1
Higher market prices encourage firms to:
A.
Reduce quality only B.
Exit the market C.
Ignore profit D.
Increase supply
Question 2
What is meant by market mechanism?
A.
D > S. B.
Process by which price is determined through S and D. C.
Price allocates scarce goods to those willing and able to pay. D.
Firms respond to price signals to maximise profit.
Question 3
What is meant by exit?
A.
Price allocates scarce goods to those willing and able to pay. B.
Firms leave when prices fall. C.
D > S. D.
Process by which price is determined through S and D.
Question 4
What is meant by rationing function?
A.
Price allocates scarce goods to those willing and able to pay. B.
Price changes signal where resources are most profitable. C.
Self-interest coordinated through markets. D.
Firms leave when prices fall.
Question 5
What is meant by entry?
A.
Higher prices encourage firms to increase supply. B.
New firms join when prices rise. C.
S > D. D.
D > S.
Question 6
The signalling function means price:
A.
Always falls B.
Eliminates competition C.
Stops trade D.
Shows where profits can be made
Question 7
What is meant by invisible hand?
A.
Self-interest coordinated through markets. B.
Price allocates scarce goods to those willing and able to pay. C.
Price changes signal where resources are most profitable. D.
S > D.
Question 8
What is meant by excess demand?
A.
S = D. B.
Firms leave when prices fall. C.
D > S. D.
Self-interest coordinated through markets.
Question 9
What is meant by incentive function?
A.
Price changes signal where resources are most profitable. B.
S > D. C.
Higher prices encourage firms to increase supply. D.
New firms join when prices rise.
Question 10
What is meant by equilibrium?
A.
S > D. B.
S = D. C.
Process by which price is determined through S and D. D.
Self-interest coordinated through markets.
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