IGCSE Economics_Midterm Review

Front

What is an advantage of competitive markets?

Back

Competition encourages the efficient use of resources.

Front

What is an essential feature of a market economy?

Back

The price mechanism sends signals to consumers and producers to allocate resources.

Front

What is a major advantage of a market economic system over a mixed economic system?

Back

All production of goods and services is determined by consumer demand.

Front

What is a benefit of the free market system?

Back

Innovation is encouraged to increase profits.

Front

What is a benefit of the markot system?

Back

Competition ensures choice for consumers.

Front

Why does a government provide certain goods and services in a mixed economic system?

Back

The government provides public goods because private firms cannot charge for them.

Front

The diagram shows the demand curve Di and supply curve S, for a good. The government introduces a subsidy to encourage production. What will be the total cost of the subsidy to the government?

Back

$50

Front

Governments sometimes intervene in the economy when the market fails. What is the most likely reason why government intervention may make the situation worse?

Back

Government decisions can take a long time to have an effect.

Front

The government has an important role in mixed economies. Which function would it not perform? Options: distributing dividends from profits of state-owned enterprises, employing workers to collect taxes, investing in transport infrastructure projects, producing goods in public corporations

Back

distributing dividends from profits of state-owned enterprises

Front

The diagrams show changes in the demand and supply curves for a good. Which diagram shows the effect of a government providing a subsidy for the good?

Back