2.4

Question 1

Price

Answer 1

The sum of money you have to pay for a good or service. It is determined by the interaction of supply and demand

Question 2

Efficiency

Answer 2

The optimal production and distribution of scarce resources

Question 3

Determination of price

Answer 3

The interaction of the free market forces of demand and supply to establish the general level of price for a good or service.

Question 4

Allocation of resources

Answer 4

How scarce resources are distributed among producers, and how scarce goods and services are allocated among consumers

Question 5

The role of price as a signal

Answer 5

Price changes to signal where resources are needed

Question 6

The role of price as a rationing tool

Answer 6

If resources are scarce, the price rises, so that only those who can afford to pay will get the product

Question 7

Equilibrium price and quantity

Answer 7

Where the quantity supplied exactly matches the quantity demanded

Question 8

Market forces

Answer 8

Factors that determine price levels and the availability of goods and services in an economy without government intervention

Question 9

The role of price as a transmission of preference

Answer 9

A change in consumer demand causes a change in price which encourages resource owners to produce more or less