IGCSEEconomicsCambridge (CIE)Exam Questions2. The Allocation of Resources2.2 The Role of Markets in Allocating Resources

The Role of Markets in Allocating Resources (Cambridge (CIE) IGCSE Economics)

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2.2 The Role of Markets in Allocating Resources

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2.2 The Role of Markets in Allocating Resources

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11 mark

What is a function of the price mechanism?

  • to allocate goods and services

  • to calculate national expenditure

  • to ensure an equal distribution of income

  • to guide government policy decisions

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21 mark

Who determines what goods and services are produced in a market economy?

  • consumers

  • employees

  • government

  • trade unions

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31 mark

What do markets use to facilitate the allocation of resources?

  • Government-imposed quotas

  • Centralised government planning

  • Supply and demand

  • The basic economic problem

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41 mark

What is the primary role of markets in allocating resources in a market economy?

  • Setting government-imposed price controls

  • Distributing resources based on political decisions

  • Allowing buyers and sellers to interact and determine prices

  • Prioritising the needs of the wealthiest consumers

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51 mark

In a market economy, which factor most determines the allocation of resources?

  • Centralised government planning

  • Individual consumer preferences and choices

  • The influence of public corporations

  • The imposition of government taxes

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11 mark

Why might a market economy fail to achieve the best use of scarce resources?

  • Consumers may lack information about which good to buy.

  • Demerit goods are underconsumed.

  • Public goods are overconsumed.

  • Most resources are owned by the government.

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21 mark

What necessarily describes the market system?

  • an economy with both a private and public sector

  • limited resources but unlimited wants

  • resources are allocated through demand and supply

  • when all resources are used to produce consumer goods

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31 mark

What role do prices play in the market's allocation of resources?

  • Prices reflect only the costs of production

  • Prices act as a means of control by the government

  • Prices provide signals about the relative scarcity of goods

  • Prices solely benefit producers, not consumers

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41 mark

Which is not one of the three questions that needs answering when determining the economic system of a country?

  • What to produce?

  • What kind of government do the citizens want?

  • How to produce it?

  • For whom to produce?

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51 mark

The economic question of 'How should goods/services be produced in an economy?' refers to:

  • Whether production should be capital intensive or labour intensive

  • Whether the economy should be in the tertiary sector

  • Whether raw materials should be imported

  • Whether the goods should be produced for wealthy households

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11 mark

The price mechanism functions as a signalling tool in a market economy by:

  • Directly allocating resources based on government regulations

  • Reflecting consumers' preferences and scarcity of goods

  • Eliminating competition among producers to maintain stability

  • Controlling prices to ensure equal access to goods for everyone

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21 mark

How does the price mechanism contribute to the efficient allocation of resources?

  • By ensuring that resources are allocated based on political priorities

  • By reducing competition among producers

  • By discouraging consumer spending on non-essential goods

  • By directing resources to where they are most in demand

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31 mark

In a competitive market, what is the role of the price mechanism in allocating resources?

  • It allocates resources based on the government's resource allocation plan

  • It allocates resources according to the preferences of producers

  • It allocates resources to those who have the greatest ability to pay

  • It allocates resources to the most efficient producers based on consumer demand

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41 mark

In a competitive market, what is the role of prices in resource allocation?

  • To ensure equal distribution of resources

  • To control supply and maintain equilibrium

  • To signal both scarcity and demand

  • To allow producers to maximise profits

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51 mark

Which of the following statements is most true

Market disequilibrium occurs when:

  • Demand is equal to supply

  • Demand is greater than supply

  • Supply is greater than demand

  • Demand is greater than supply or supply is greater than demand

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