What is the primary role of the price mechanism in a free market?

Understanding the Price Mechanism

Quiz
•
Other
•
11th Grade
•
Easy
Joe Upper
Used 1+ times
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
To eliminate market competition
To centralize decision-making
To determine the allocation of resources
To ensure equitable distribution of resources
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which function of the price mechanism involves prices adjusting to show where resources are needed?
Incentive function
Signalling function
Equilibrium function
Rationing function
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What happens when there is a rise in market price according to the price mechanism?
Consumers are encouraged to buy more of the product
The government intervenes to control prices
Producers are encouraged to switch into making that good
Producers are discouraged from making the good
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In a free-market system, how is decision-making characterized?
Regulated by a single body
Centralized
Decentralized
State-controlled
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a consequence of a fall in price in the market?
An increase in supply
A decrease in demand
A rise in production costs
An extension of demand
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which economic system is characterized by significant intervention in market prices?
Traditional economy
Free-market system
Mixed economy
Planned economic system
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a signal to suppliers to expand production?
Decreasing production costs
Government subsidies
High demand from consumers
Excess supply in the market
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