Day: March 31, 2019

Which of the following is a feature of a market economy?

Select ONE answer:

1. Competition ensures product differentiation
2. Consumer preferences determine the allocation of resources
3. Producers aim to maximise positive externalities
4. Resources are allocated through the planning mechanism

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 2

1. Competition ensures that firms strive to minimise their average costs and achieve productive efficiency.
2. Correct: Changes in demand patterns by consumers lead to changes in the allocation of resources.
3. Consumers aim to maximise their individual welfare.
4. Resources are allocated through the price mechanism.

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