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