Economics Multiple Choice Question – 6 November 2017

Which of the following conditions must be satisfied if a good is to be supplied through the market?

Select ONE answer:

1. There are a large number of buyers and sellers
2. There are no restrictions on the entry of new firms into the industry
3. The goods supplied by different suppliers are homogeneous
4. Those unwilling to pay for the good can be excluded from the benefits
5. There are lots of market signals

Give the advantages and disadvantages of a centrally planned economy?

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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 4 – The key to this question is in understanding the term ‘market’. It does not say ‘supplied through a perfectly competitive market’. Consider answers 1, 2, and 3. These are all necessary if a good is to be supplied under conditions of perfect competition. But now look again at 4 – If a producer cannot exclude people from the benefits of his output he cannot oblige them to pay. This is a feature of a public good of course.

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